SAOG11250 | What is a qualifying company: conditions for a qualifying company: intra-group turnover

Responsible officers must include intra-group turnover in the aggregate turnover calculation.

Example

Company A is a member of a group. It makes widgets that it sells to third parties. It also sells widgets to company B, another company in the same group. Both companies have the same financial year.

The responsible officers of company A must include the sales to company B within the turnover of company A when they calculate whether company A, either on its own or in aggregate with other UK incorporated companies within the same group, meets the turnover condition.

If company B sells on the widgets it bought from company A to third parties in the financial year, this sale will be reflected in its turnover figure. In this situation, both companies’ sales of the widgets must be reflected in the aggregated turnover figures.

Company B may ‘consume’ the widgets in its own trade in which case there is no onward sale and nothing included in turnover. This simply reflects fact and no ‘deemed’ sales by company B should be calculated and included in the aggregation.

It is not expected that the turnover test will hinge on intra-group transactions very often.