Taxation (International and Other Provisions) Act 2010 section 262

UK net debt of worldwide group for period of account of worldwide group

Section 262 explains how to calculate the "UK net debt" of a worldwide group for a period of account, which is a key figure used in the worldwide debt cap rules to determine whether UK group companies have excessive debt.

• The UK net debt is the total of the net debts of each "relevant group company" — essentially UK group members that are within the scope of corporation tax — for the period of account of the worldwide group.
• A "relevant group company" is one that is a member of the worldwide group at any point during the period and is within the charge to corporation tax for a relevant accounting period that falls within the worldwide group's period of account.
• The net debt of each relevant group company is calculated as its average liabilities minus its average assets, where both liabilities and assets are limited to those that represent "relevant liabilities" (broadly, debt and debt-like amounts owed) and "relevant assets" (broadly, debt and debt-like amounts owed to the company).
• If a relevant group company's average relevant assets exceed its average relevant liabilities — meaning it is a net creditor rather than a net debtor — its net debt is treated as a negative figure, which reduces the overall UK net debt of the group.

---