CFM90655 | Debt cap: gateway test: the accounting periods of companies joining or leaving a group

This guidance applies to worldwide group periods of account ending before or straddling 1 April 2017.

How to work out the accounting period when a company joins or leaves a group or groups merge

TIOPA10/S262 (8) provides that where a company becomes a relevant group company or group securitisation company part way through a period of account of the worldwide group, the accounting period starts on the date that the company becomes a relevant group company or group securitisation company. Similarly, where a company ceases to be a relevant group company or group securitisation company part way through a period of account of the worldwide group, that date is taken as the end date.

Again, the company is not required to prepare a full audited balance sheet at these dates; instead it only need consider what the amounts of relevant liabilities (see CFM90710) and relevant assets (see CFM90720) would be at those dates if a balance sheet had been prepared in accordance with GAAP on those dates.

Mergers and Takeovers

FA12 introduced rules to deal with mergers or takeovers or de-mergers between groups and these rules are at CFM90480 onwards.

CFM90670 explains how TIOPA10/S348 is applied in practice.