Finance (No. 2) Act 2023

Accounts or statements reflecting purchase price accounting adjustments U.K.

[F1 4A (1) This paragraph applies in relation to accounts or financial statements (“the relevant statements”) in relation to a multinational group in a territory that—

(a) fall within paragraph (a) or (b) of paragraph 4(1), and

(b) reflect purchase price accounting adjustments.

(2) If—

(a) a country-by-country report has been submitted in respect of the group in that territory in respect of a period commencing on or after 1 January 2023 and concluding before the commencement of the accounting period for which the transitional safe harbour election is being made,

(b) the financial accounts used for the preparation of that report did not reflect purchase price accounting adjustments, and

(c) there is no requirement to reflect purchase price adjustments in the relevant statements under the law of the territory that applies in relation to the preparation of those statements,

the relevant statements are not qualified financial statements.

(3) Sub-paragraph (4) applies if—

(a) the relevant statements are qualified financial statements, and

(b) an impairment of goodwill in relation to a transaction entered into on or after 1 December 2021 is reflected in a member’s profit (loss) before income tax.

(4) Adjust the profit (loss) before income tax of the member so that it does not reflect that impairment for the purposes of determining—

(a) in a case where the condition in sub-paragraph (5) is not met, whether the simplified effective tax rate test is met (see paragraph 8), and

(b) in any case, whether the routine profits test is met (see paragraph 9).

(5) The condition in this sub-paragraph is that the relevant statements reflect—

(a) a reversal of deferred tax liability in relation to the goodwill, or

(b) the recognition or increase of a deferred tax asset in relation to it.]

Textual Amendments

F1 Sch. 16 para. 4A and cross-heading inserted (with effect in accordance with Sch. 4 para. 72(4) of the amending Act) by Finance Act 2025 (c. 8), Sch. 4 paras. 46(6), 72(4)