HMRC have updated the Corporate Finance Manual on page CFM 95435, entitled “Interest restriction: groups, periods and financial statements: period of account: change in the ultimate parent”. The relevant legislation is TIOPA 2010, s. 483.
The HMRC summary of the change states simply “update changes following review”.
The relevant page contains the following guidance, followed by an example:
“The ultimate parent of a worldwide group might draw up financial statements for a period, but only be the ultimate parent of the group for a part of that period.
Where this is the case, those financial statements are ignored and financial statements are instead treated as drawn up in respect of the part of the period where the entity was the ultimate parent. As a result it is this shorter period that is the period of account for the group.
In practice, this is likely to be a relatively unusual scenario, possibly arising in the event of a demerger or spin off of part of a larger worldwide group.
However S483 could also apply where a company is formed to become a new ‘topco’ inserted between the ultimate parent of a group (the ‘old group’) and its shareholders and that company draws up consolidated financial statements for a period that begins before it becomes the ultimate parent of the ‘new group’, see CFM98245, which may allow carry forward of unused interest allowance from the old group to the new group.”