MTT33120 - Calculating top-up amounts: Additional top-up amounts: Additional top-up amount where covered taxes are less than expected - Election to carry forward

An election can be made under section 205 of Finance (No.2) Act 2023 to carry forward a collective additional amount of a group, where the collective additional amount arose as a result of covered taxes being less than expected.

Some or all of the collective additional amount can be carried forward until a period where the members have a positive figure in the adjusted profits.

This allows a group to avoid being charged an amount of tax in a period in which it has negative adjusted profits.

An election under section 205 is an annual election. See MTT52200 for guidance on making an election.

Effect of an election

When the election is made:

  • the collective additional amount for the current period is reduced by the qualifying amount, and
  • the qualifying amount is to be subtracted from the combined covered tax balance for the standard members of the group in that territory in the next accounting period in which the members of the group in the territory do not have a collective loss when determining the adjusted profits.

Qualifying amount

The 'qualifying amount' is:

  • the collective additional amount,

less

  • the amount of any deferred tax asset deemed to arise under section 217(7) for the period (see MTT25300).