MTT33210 - Calculating top-up amounts: Additional top-up amounts: Additional top-up amount following recalculation of prior period - Allocation to members

A collective additional amount arising following a recalculation is to be allocated between members of the group in accordance with section 207 of Finance (No.2) Act 2023.

Amounts so allocated are an additional top-up amount of the member.

A collective additional amount arising where covered taxes are less than expected is allocated between members under a different rule (see MTT33110).

Method

The collective additional amount is allocated between the members as follows:

Step 1: Determine the aggregate top-up amount (following recalculations) that the current members would have for the periods that have been recalculated.

Step 2: For those accounting periods, determine the total top-up amount that each member would have in accordance with the recalculation that gave rise to the collective additional amount.

Step 3: Where the result for Step 2 for a member is greater than nil, divide that result by the result by the result of step 1. Otherwise, the result of this step is nil for that member.

Step 4: The additional top-up amount for each member is equal to the amount given by multiplying the collective additional amount by the result of Step 3 for that member.

Attributing additional top-up amount to responsible members

Additional top-up amounts are to be allocated to responsible members in the same was as ordinary top-up amounts.

Ordinarily, top-up amounts will not be allocated to a member with no adjusted profit. Therefore, where no member of the group in has made an adjusted profit in a territory, it would be impossible to allocate a top-up amount.

Where there is an additional top-up amount under section 206, and the members in the territory collectively have negative adjusted profits, each member with an additional top-up amount is treated as having adjusted profits for the purpose of attributing amounts to responsible members (see MTT05130). This ensures its additional top-up amount can be properly attributed to responsible members.

A member will be treated as having adjusted profits of the following amount:

  • its additional top-up amount,

divided by

  • 15%.

For example, a member of a loss-making group with an additional top-up amount of 45 is treated as having adjusted profits of 300.

This is not applicable for Domestic Top-up Tax, which has a different rule for bringing top-up amounts into charge (see MTT31100).