After section 848 insert—

“848AAssets held for purposes of exempt foreign permanent establishments

(1)

This section applies if—

(a)

subsection (1) of section 775 (transfers within a group) would apply in relation to the transfer but for paragraph (c) of subsection (4) of that section, and

(b)

the asset has not at all times when the election under section 18A had effect been held by the transferor wholly for the purposes of a permanent establishment such as is mentioned in that paragraph.

(2)

The transfer is treated for the purposes of this Part as being at the following value—

$\mathrm{WDV}+\mathrm{FPEA}$

where—

WDV is the tax written-down value of the asset, and

FPEA is the amount which, for the purposes of Chapter 3A of Part 2, would in the case of the transferor be the foreign permanent establishments amount attributable to the transfer for the accounting period in which it took place if the transfer were at market value.”