Taxes Consolidation Act 1997 section 111AN

Transfer of assets and liabilities

Section 111AN deals with how gains and losses on the transfer of assets and liabilities are recognised for Pillar Two purposes, including special rules that apply where the transfer takes place as part of a reorganisation.

• In an ordinary disposal, the disposing entity includes any gain or loss in qualifying income, and the acquiring entity uses the standard financial accounting carrying value of the acquired assets and liabilities.
• In a reorganisation where the disposing entity is not taxed on the gain or loss, the gain or loss is excluded from qualifying income and the acquiring entity inherits the disposing entity's carrying values — unless a non-qualifying gain or loss arises, in which case partial recognition applies.
• Where a non-qualifying gain or loss arises, the disposing entity includes the gain or loss only to the extent of that non-qualifying amount, and the acquiring entity adjusts the inherited carrying values accordingly under local tax rules.
• An election is available to mark assets and liabilities to fair value for qualifying income purposes following a triggering event, with the option to spread the resulting gain or loss over five years.

---