MTT41610 - Particular entities and adjustments: Joint venture groups: Overview
Source: gov.uk (2025-08-05)


Where an entity has its financial results reported in the consolidated financial statements of a consolidated group (the 'owning consolidated group') under the equity method of accounting, and the other criteria listed below are met, that entity will be a joint venture parent for MTT purposes.

‘Joint venture’ is defined specifically for MTT purposes, so an entity that is a joint venture under an accounting standard will not necessarily be a joint venture under MTT.

The entity will not be a member of the consolidated group because its financial results are not reported on a line-by-line basis in the consolidated financial statements of the group (see MTT10110 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt10110)). Instead, the joint venture parent will be the parent of a joint venture group. That joint venture group will consist of that joint venture parent and any subsidiaries which it consolidates into its own consolidated financial statements.

The effective tax rate and top-up amounts of the joint venture group will be determined as though it were a separate group.

Those top-up amounts are charged to responsible members as though the joint venture group members were members of the consolidated group, for MTT.

This is set out in sections 226 and 227 of Finance (No.2) Act 2023.

Owning consolidated group

The owning consolidated group must meet the revenue threshold test (see MTT11010 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt11010)). The revenue of joint venture members will not be included in the revenue threshold test for the owning consolidated group.

Joint venture group

A joint venture group consists of a joint venture parent and any joint venture subsidiaries. As the tests for the joint venture parent are carried out in respect of the owning group, it may be a joint venture group in respect of each group that has an ownership interest in the joint venture parent.

A joint venture parent without any subsidiaries will also form a joint venture group, consisting of that single joint venture parent.

A joint venture group cannot be subject to MTT in its own right. If a group that would otherwise be a joint venture group in relation to a consolidated group is subject to MTT (or a foreign equivalent) in its own right, it will itself be a consolidated group.

Joint venture parent

‘Joint venture parent’ is defined in section 226(2).

Joint venture subsidiary

An entity is a joint venture subsidiary of a joint venture parent if its assets, liabilities, income, expenses and cash flows are included in the consolidated financial statements of a joint venture parent.

If a joint venture parent has a permanent establishment, the permanent establishment is treated as a separate joint venture subsidiary of the joint venture group.

Where the joint venture parent does not actually produce consolidated financial statements, deemed consolidation is required.

This broadly mirrors the rules for identifying the members of a consolidated group (see MTT10110 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt10110)).

Multiple joint venture groups in territory

Where there are multiple joint venture groups in a territory, a separate calculation is required for each joint venture group.

Standard members and non-standard members

Standard members, investment entities and minority owned members (the two types of non-standard member) each have their effective tax rate and top-up amounts calculated in separate subgroups within a territory.

Where the joint venture group contains these different subgroups, the same procedure will apply.

Because they are members of a joint venture group, their effective tax rate is already calculated separately. Therefore, for example, an investment entity that is a joint venture group member will have its top-up amounts calculated separately from:
- investment entities of the consolidated group and any other joint venture groups, and
- standard members and minority owned members of the consolidated group and any joint venture group.
Although the treatment of a joint venture group is similar to non-standard members, in that the effective tax rate and top-up amounts are calculated separately, a joint venture group member is not a type of non-standard member as it is not a member of the group. When calculating the top-up amounts of the joint venture group, a joint venture group member will be either a standard member or a non-standard member.

See MTT41510 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt41510) for guidance on standard and non-standard members.

Undertaxed profits rule

Where joint venture group members are determined to have an untaxed amount under the undertaxed profits rule (UTPR), those amounts will be charged to other members of the consolidated group.

Where certain conditions are met, the untaxed amounts of joint venture groups are to be treated as nil.

See MTT62120 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt62120) for guidance on the treatment of joint venture groups under the UTPR.

Amendment in Finance Act 2025

Section 226 was amended by FA25. This guidance page reflects the current version of the legislation. Consult FA25 for legislation applicable to prior periods if the retrospection election does not apply (see MTT09490 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt09490)).