CFM90730 | Debt cap: gateway test: calculation of gateway test using the presentation currency of the group

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

The gateway test can be calculated using a currency other than sterling

The calculations of the worldwide gross debt and UK net debt amount are both based on amounts disclosed in the balance sheets of the worldwide group and its relevant group companies. Unless the group opts to perform the calculations using a currency other than sterling, the amounts disclosed in the balance sheets are translated into sterling (where they are not already presented in sterling) using the spot rate for the date the balance sheet is drawn up (TIOPA10/S 273 ).

Some groups may prepare group consolidated financial statements and subsidiaries’ financial statements in a currency other than sterling. Where this is the case provided that all the amounts that are required to calculate the worldwide gross debt and UK net debt amounts are presented in the same currency, the gateway test can be calculated using that currency. TIOPA10/S273 (3) (b) and (4) set out the rules for calculating the de minimis amount in cases where the currency is not sterling. The de minimis of £3 million is replaced with an amount that is the average of

• £3 million translated into the other currency using the spot rate for the start date for the relevant group company, and

• £3 million translated into the other currency using the spot rate for the end date for the relevant group company.

As one relevant group company may have a different start (or end) date to another relevant group company, the de minimis limit has, if necessary, to be separately calculated for each relevant group company.