Finance Act 2024

Intragroup transfers before entry into regime U.K.

38 (1) Paragraph 2 of Schedule 16 (intra-group transfers before entry into regime) is amended as follows.

(2) In sub-paragraph (3)(b), after “limited to” insert “the lesser of the cap amount and the sum of—

“(i) the value of deferred tax assets that arose in relation to the assets before their transfer, and

(ii)”.

(3) After that sub-paragraph insert—

“(3A) For the purposes of determining the value of a deferred tax asset under sub-paragraph (3)(b)(i)—

(a) if the rate of tax in relation to that asset is greater than 15%, the value is to be adjusted so that it reflects the value it would be if the rate had been 15%, and

(b) exclude the impact of any valuation adjustments or accounting recognition adjustments.”

(4) In sub-paragraph (5)(b), for “is” substitute “, and the value of deferred tax assets that arose in relation to the assets before their transfer, are”.

(5) For sub-paragraph (7) substitute—

“(7) In determining the tax expense of the transferor in relation to the transfer of the assets—

(a) where any loss arising in the accounting period in which the transfer took place is offset against any taxable gain arising on the transfer, ignore that offsetting, and

(b) exclude the impact of any valuation adjustments or accounting recognition adjustments.”

(6) In sub-paragraph (9)—

(a) for “, ignoring sub-paragraph (7),” substitute “the sum of”,

(b) for “in relation to the transfer of assets would exceed” substitute “and the value of deferred tax assets that arose in relation to the assets before their transfer is greater than”, and

(c) omit “in relation to it”.

(7) In sub-paragraph (11), for “substantially the same economic effect as” substitute “a similar effect for accounting purposes to”.

(8) After sub-paragraph (11) insert—

“(12) Where assets are transferred from one member of a multinational group to another member of that group as a result of a series of transfers that—

(a) fall within sub-paragraph (1), but

(b) do not fall within sub-paragraph (2),

that series is to be treated as a single transfer of assets that falls within sub-paragraph (1).

(13) This paragraph applies to that single transfer as if—

(a) the reference to the transferor in sub-paragraph (3)(a) were to the transferor in relation to the first transfer in the series,

(b) the references in sub-paragraph (3)(b) to the cap amount, the value of deferred tax assets that arose in relation to the assets before their transfer and the tax paid amount were to the aggregate of each such amount or value as determined for the purpose of each transfer that makes up the series,

(c) the reference to the date of the transfer in sub-paragraph (4)(a) were to the date of the last transfer in the series, and

(d) the references to the transferee in sub-paragraph (4)(b) were to the transferee in relation to the last transfer in the series.”