MTT44040 - Particular entities and adjustments: Restructures: Transfers of assets or liabilities – Transfer to a group member
Source: gov.uk (2025-08-05)


Where assets or liabilities transferred to a member of a group, the value of those assets (for the purpose of determining the member‘s adjusted profits) depends on whether certain conditions are met.

This is set out in section 211 of Finance (No.2) Act 2023).

Conditions met – asset valuation

Where one of two conditions are met, the value of the assets or liabilities (for the purpose of determining the member‘s adjusted profits) is their carrying value in the hands of the transferor immediately before the transfer.

Those conditions are:
- Condition A - The transfer forms part of a qualifying reorganisation (see MTT44030 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt44030)).
- Condition B - The transferee and transferor are members of the same group, and:
- the transferee and transferor are located in the same territory,
- the transferee and transferor are included in the same tax consolidation group (see MTT21120 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt21120)) in that territory, and
- an election to exclude intra-group transactions has effect in relation to those members at the time of the transfer (see MTT21120 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt21120)).
Neither condition met – carrying value to be used

If neither of the above conditions are met, the value of the assets or liabilities (for the purpose of determining the member‘s adjusted profits) is:
- the carrying value of those assets or liabilities immediately after the transfer, as determined under the accounting standard used in determining the underlying profits of the member, and
- after any adjustments required when calculating the adjusted profits (see MTT21000 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt21000)+).
Neither condition met - adjustment to arm’s length basis

The adjusted profits are to be adjusted to ensure a transfer is reflected on an arm’s length basis where:
- neither condition A nor B is met,
- the transfer is from another member of the group, and
- neither a gain nor a loss is recorded in the underlying profits accounts of the transferor in respect of the transfer.
The transfer must be reflected on an arm’s length basis (see MTT21230 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt21230)) for both transferor and transferee.

Non-qualifying gain or loss made on transfer in the course of qualifying reorganisation – treatment of asset for transferee

Where:
- a member of a group transfers an asset or liability to another entity in the course of a qualifying reorganisation,
- that member recognises a non-qualifying gain or loss on the transfer, and
- the transferee is a member of a group,
the value of the assets or liabilities is to be adjusted to exclude the non-qualifying gain or loss, in a manner consistent with the tax treatment of the assets or liabilities, when determining the adjusted profits of the transferee (for either MTT or Domestic Top-up Tax).