CFM90830 - Debt cap: financial services groups: qualification based on business activities of the worldwide group or the group companies

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

A worldwide group can test whether the exclusion applies by reference to the group as a whole or just the relevant group or group securitisation companies

TIOPA10/S266(1) treats a worldwide group as a qualifying financial services group for a period of account if the trading income condition is met in relation to that period. S266 (2)(b) treats the trading income condition as met if all, or substantially all of the worldwide trading income is derived from qualifying activities. The worldwide trading income is defined in TIOPA10/S272 (see CFM90940).

Alternatively the group can test whether it is a qualifying financial services group by reference to the trading income of just the relevant group and group securitisation companies. S266 (2)(a) treats the trading income condition as met in relation to a period of account if all, or substantially all of the UK trading income of the worldwide group is derived from qualifying activities. The UK trading income is defined by TIOPA10/S271 (see CFM90950). This alternative test allows non-UK headed groups to qualify for the exemption if the UK part of the group would meet the trading income condition if it were a separate group.

A group can opt for either test; it does not have to meet the trading income condition under both.

If the group is a qualifying financial services group for a period of account then the group is not subject to Part 7.

Group securitisation company is defined in TIOPA10/S273A as a company that at any time during a period of account of the worldwide group is:

• A securitisation company within the meaning of FA2005/S83(2) or CTA10/S623 (see CFM72000);
• And its results are disclosed in the financial statements of the worldwide group.