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Purpose,ÌýscopeÌýand audienceÌý

TheseÌýguidelinesÌýare most relevant to large and complex business groups when preparing or reviewing group structure information for HMRC. They help UK businesses share clear information about their group structure and transactions, saving them both time and resources, and support collaborative working.

UKÌýbusinessesÌýshare group structure information with HMRC for various purposes. For example, to:

• support aÌýstatutory clearance application, for more information read Apply for statutory clearance for a transactionÌý
• request anÌýAdvanced Pricing Agreement, for more guidanceÌýread INTM422020 – Transfer pricing: methodologies: Advance Pricing AgreementsÌý
• makeÌýaÌýProfit Diversion Compliance FacilityÌýdisclosure, for more information read HMRC Profit Diversion Compliance FacilityÌý
• comply withÌýa HMRC information request as part of a compliance check
• to showÌýbusiness updates and significant business changes as part of the LargeÌýBusiness Risk ReviewÌýprocess, for more guidanceÌýread Tax Compliance Risk manual TCRM3100Ìý–ÌýTheÌýBusiness Risk Review (BRR+): OverviewÌý

How to use these guidelinesÌý

These guidelines are not mandatory. YouÌýcanÌýuseÌýgroup structure informationÌýthat is already available.ÌýWe encourage you to:

• check thatÌýthe group structure informationÌýprovides the key information set out in these guidelinesÌý
• highlight and explain the differencesÌýbetween the best practice in these guidelines and the information providedÌýto HMRCÌý
• clarify any nuances,ÌýfeaturesÌýand special characteristics
• provide the date of the group structure or transaction information

When highlighting differences, you may need to include:Ìý

• additional information in a letter, emailÌýorÌýadditionalÌýtableÌý
• a key to the group structure chartÌý
• existing country-by-country reporting (CbCR) data, with an additional column and a table — read section ‘Complex group structures’ in this guide

Key informationÌý

It is best practiceÌýtoÌýshareÌýgroup structure information that provides the following key information as a minimum:Ìý

• entity typeÌý
• nameÌý
• ownershipÌýand orÌýcontrolÌý
• country of taxÌýjurisdictionÌý
• special characteristicsÌý

The entity type includes incorporated bodies, unincorporated bodies, joint ventures, cells in protected cell companies and individuals.

If the control of the entity is different to its ownership, thisÌýshouldÌýbe clearly shown. The business should also explain how the entity is controlled, such as through shares, voting rights or similar powers.

If the country of incorporation is different to the country of tax residence, show both country codes — country of tax residence followed by the country where legally formed.

A branch or permanent establishmentÌý(PE)Ìýis not incorporated.ÌýYou should provide the country codeÌýfor theÌýbranch or PE. ForÌýexample, the UK branch of a US company would provide UK country code for the branch. You should always show the entity, which theÌýbranchÌýor PE is part of, on the group structure andÌýits tax residence. You should always include the company name in the branch name to help reinforce the fact that they are part of the same entity.

A partnershipÌýtax status is either ‘transparent’Ìýor ‘opaque’. Read INTM180010 — Foreign entity classification for UK tax purposes: Introduction. Some partnerships are not formally incorporatedÌýbutÌýwill have a country where they are legally formed.ÌýThey also may not have a tax residence status for UKÌýtax purposes. In this case, includeÌýtheÌýcountry of tax residenceÌýorÌýjurisdictionÌýwhere legally formed or bothÌýinside the partnership symbol.ÌýAlternatively, an accompanying noteÌýto clarify:

• the tax status of the partnershipÌýand its partnersÌý
• where legally formedÌý
• country of tax residence

A trustÌýis not incorporated.ÌýUse country codesÌýtoÌýindicateÌýthe taxÌýresidenceÌýand the countryÌýwhere legally formed, if different.

Examples of special characteristics include:Ìý

• hybrid entityÌý
• public bodyÌý
• charityÌý
• 3rdÌýparty bankÌý
• investment managerÌýorÌýbrokerÌý
• institutional investorsÌý
• joint ventureÌý
• limited, limited liabilityÌýorÌýScottishÌýpartnershipÌý

Hybrid entities

HMRCÌýneeds to be able to identify hybridÌýentitiesÌýin a group structure, to understand complexities in the tax treatment of the entity and its transactions. For a definition of a hybrid entity,Ìýread INTM550580 — Hybrids: definition of key terms.

To help you understand the importance of hybrids in your group structure, we have provided 2 examples.

US check the box — example 1

A partnership hybrid — example 2

StandardÌýshapesÌýandÌýsymbols

Using standard shapes and symbols to represent the key information is common practice. HMRC manuals refer to this as standard notation.ÌýThe commonÌýshapesÌýand symbolsÌýused toÌýshowÌýentity typesÌýare:Ìý

• rectangleÌý— companyÌý
• ovalÌý— branch orÌýPEÌý
• triangleÌý— partnershipÌý
• triangle inside a rectangleÌý— partnershipÌýhybridÌý
• oval inside a rectangleÌý— company hybridÌý
• diamondÌý— trustÌý
• circleÌý— an individualÌý

When sharing pre-existing group structure diagrams that may not have been specifically prepared for HMRC, it is best practise to include the reference key.Ìý

Key informationÌýis provided inside or beside the shape. For example:Ìý

• entity name — inÌýthe middle of the shapeÌý
• 100% ownershipÌý—Ìýuse aÌýhierarchicalÌýstructure withÌýa solidÌýline
• partial ownershipÌý— include the percentageÌýof ownership either next to the solid line in the hierarchical structure or in theÌýsupplementary notesÌý
• place of tax residenceÌý— alphabetic country code shown in a small rectangle positioned at the bottom right corner of the shape

Read ISOÌýcountry codes.

Some groups use coloured shapes toÌýindicateÌýtax residence, with a key matching each colour to a country. This is an acceptable alternative to alphabetic codes, but you should consider the accessibility of the information.

For more information about:

• images and descriptions, read Appendix A — standard shapes and symbols
• practical illustrations of group structure charts, read Appendix B — examples

Complex group structuresÌý

Some businessesÌýhave aÌýcomplex group structure and may find it difficult to provide a visual chart.ÌýA helpful alternative isÌýtoÌýuse a table format to provide this information.

Some large businesses provide entity-level information to satisfy CbCR. Read IEM300010 — Country-by-Country Reporting: Introduction.

Using yourÌýCbCRÌýinformation can minimise the effort required by businesses to provide group structure information.

Step 1 — obtain the followingÌýentity level information from Table 2 in the CbCR:Ìý

• taxÌýjurisdictionÌý
• constituent entities resident in tax jurisdictionÌý
• constituent entities Tax Identification Number (TIN)
• tax jurisdiction of incorporation if different from residenceÌý

Step 2 — add entity typeÌýinformation,ÌýwithÌýreference toÌýanyÌýspecial characteristicsÌý(for example Company;ÌýCompany Hybrid) to the Table 2 data from the CbCR.

Step 3 — provide a separate table with the following data points:

• parent name or TIN
• subsidiary name or TIN
• ownership percentage

To help you understand the steps to create table 1 and table 2, read example 3.

Group structure using a table format — example 3

Partial group structuresÌý

Sometimes businesses only need to share part of the group structure, for example, when discussing or reviewing a transaction that only affects part of the group. HMRC encourages this approach for complex groups. HMRC may need to carry out further checks to establish all relevant facts.

Further questions

If you have any further questions after reading these Guidelines for Compliance, you can contact us by email at:Ìýccgguidelinesforcompliance@hmrc.gov.uk.Ìý

Include theÌýreference GfC17Ìýin the subject line. Copy your customer compliance manager into the email if you have one.Ìý

Read about the risks ofÌýcorresponding with HMRC by email.