MTT62350 - Charging mechanisms: Undertaxed Profits Rule: Allocation of untaxed amounts: Value of tangible fixed assets
Source: gov.uk (2025-08-05)


In order to perform the calculations set out in MTT62320 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt62320) and MTT62330 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt62330), a group is required to calculate the value of the tangible fixed assets of each qualifying member.

Tangible fixed assets include all tangible assets, wherever located, other than cash or cash equivalents, or financial assets.

This is set out in section 229H Finance (No.2) Act 2023.

Determination of value of tangible fixed assets

The value of the tangible fixed assets of a qualifying member is half of:
- the sum of the values of each tangible fixed asset held by the member at the start of the period, and
- the sum of the values of each tangible fixed asset held by the member at the end of the period.
The values of each tangible fixed assets should be the values as recorded in the member’s appropriate financial statements (see MTT62420 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt62420)), including the effect of any accumulated depreciation, impairment or depletion.

The amounts to be included in the value of tangible fixed assets are simply the amounts recorded in respect of tangible fixed assets in the appropriate financial statements. It is not significant where the assets are located, whether the assets are held for lease, or whether the asset is a 'right of use' asset.

Member joining or leaving group in the period

If the member is not a member of the group at the start of the period, the sum of the values of each tangible fixed asset held by the member at the start of the period is deemed to be nil.

Similarly, if the member is not a member of the group at the end of the period, the sum of the values of each tangible fixed asset held by the member at the end of the period is deemed to be nil.

No more detailed apportionment can be made. This is because the allocation of an untaxed amount does not change a group’s liability to tax, it only determines which territory will collect the untaxed amount.

Permanent establishments

Where:
- the member is a permanent establishment, and
- the permanent establishment does not prepare separate financial statements,
the financial statements, for this purpose, will be the hypothetical financial statements of the permanent establishment.

Tangible fixed assets of flow-through entities

Where a member of a group is a flow-through entity, its tangible assets are to be treated as being held by members of the group:
- that are not flow-through entities, and
- are located in the territory in which the flow-through entity was created.
If there are no such members in that territory, the assets are ignored for the purposes of the calculation.

This treatment only applies for the purpose of determining the proportion of the untaxed amount to be allocated to the UK. It does not apply for the purpose of allocating amounts to qualifying members.

This treatment does not apply to the assets of a permanent establishment of a flow-through entity.

Example 1

UK Co 1 is a member of Alpha Group, a multinational group. It must allocate the untaxed amount for a period running from 1 January 2045 to 31 December 2045.

The value of the tangible fixed assets in its financial statements as at 1 January is 500.

The value of the tangible fixed assets in its financial statements as at 31 December is 700.

Therefore, for the purposes of allocating an untaxed amount for the 2045 period, the value of the tangible fixed assets of UK Co 1 is (500 + 700) / 2 = 600.

Example 2

The facts are as above, except that in this case, UK Co 1 first became a member of the group on 1 December 2045.

As UK Co 1 was not a member of the Alpha Group at the start of the period, the sum of the values of its tangible fixed asset at the start of the period is deemed to be nil. Therefore, for the purposes of allocating an untaxed amount for the accounting period ended 31 December 202X in Alpha Group, the value of the tangible fixed assets of UK Co 2 is (0 + 700) / 2 = 350.