CFM95340 | Interest restriction: groups, periods and financial statements: the worldwide group: relevant entity

TIOPA10/S474

An entity can only be an ultimate parent if it is a relevant entity.

A relevant entity is:

• A company, or

• An entity whose shares, or other interests, are listed on a recognised stock exchange and sufficiently widely held.

Company

A company is defined for the Corporation Tax Acts by CTA2010/S1121 as any body corporate or unincorporated association, but does not include a partnership, local authority or a local authority association.

Sufficiently widely held

Shares, or other interests, which are listed on a recognised stock exchange will be sufficiently widely held where no participator in the entity holds more than 10% by value of all the shares or other interests.

Excluded entities

Certain entities are specifically excluded from being relevant entities. These are:

• The Crown

• A Minister of the Crown

• A government department

• A Northern Ireland department

• A foreign sovereign power

Example

Interests in a Limited Liability Partnership (Alpha LLP) are listed on the London Stock Exchange and are held by a number of participators. The interests have a total value of £100m. One participator holds £12m worth of the interests which equates to 12%. Alpha LLP is therefore incapable of being a relevant entity because it does not fall within the definition of a company and, although it is listed on a recognised stock exchange, one participator holds an interest that is over the 10% threshold.