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Chapter INTM503030

Document Cited in Related
Vincent
Published date09 April 2016
Record NumberINTM503030
CourtHM Revenue & Customs
IssuerHM Revenue & Customs
Points to examine

Tax savings are a factor when groups reorganise or centralise functions and finance is no exception. The general guidance on tax planning structures is worth considering when finance or treasury functions are moved to a new location or centralised (see INTM465000 onwards).

However it is very common for groups of companies to centralise some or all of their finance function, and non-tax considerations will play a significant part in the decision to centralise. The finance function may be centralised within a group’s holding company but it is increasingly common for it to be concentrated in a special-purpose subsidiary or group finance company. More complex treasury management operations may locate treasury management and control in a separate company from transaction execution. A factual and functional analysis should be applied to each entity.

Commercial reasons for centralisation can include:-

  • improved co-ordination of finance functions across the group
  • location of functions close to financial markets
  • greater economies of scale
  • increased bargaining power
  • recognition of the status of treasury personnel
  • the need to measure the effectiveness of the treasury function by making it a separate cost or profit centre
  • the implementation of a management strategy to enable group companies to focus exclusively on their core business
  • maximisation...

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