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FM 20: Financial arrangements: transfer at market value
or “Rules for transferring financial arrangements between companies in the same group at market value”
You could also call this:

“Rules for property when a company leaves a tax group”

When a company leaves a group of companies that are taxed together (called a consolidated group), there are special rules about property that has been transferred between companies in the group. These rules apply when the company isn’t closing down completely.

If the property hasn’t already been included in the group’s tax calculations, the company that’s leaving is treated as if it sold the property to someone it’s not connected to, just before it left the group. The company is then treated as if it bought the property back straight away at its current market value.

Sometimes, it’s hard to work out the value of the property on its own. This might happen if it has become part of something else or if its value isn’t clear. In these cases, you need to use the value of the property when it was last transferred between companies in the group. If the property was transferred more than once, you use the value from the most recent transfer where you can figure out what it was worth.

These rules help make sure that the right amount of tax is paid when a company leaves a consolidated group and takes property with it.

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Next up: FM 22: Arrangements to avoid consolidation rules

or “Rules to prevent companies from dodging group tax responsibilities when transferring property”
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Part F Recharacterisation of certain transactions
Consolidated groups of companies: Accounting for particular property

FM 21Property transfers when companies leave consolidated groups

  1. This section applies to the extent to which a transfer of property has not previously been taken into account in the calculation of a consolidated group’s taxable income under sections FM 8 to FM 13, or FM 15 to FM 20 and FM 23 when—

  2. a company leaves a consolidated group, but not through liquidation; and
    1. the company holds property that has at any time been transferred between companies in the same consolidated group; and
      1. sections FM 15, or FM 17 to FM 20 applied to the transfer of the property.

        1. The company is treated as disposing of the property immediately before it leaves the consolidated group to a person not associated with it, and reacquiring it at that time at its market value.

        2. If the item of property is part of or is absorbed into some other property, or its market value cannot be separately identified, the company is treated as disposing of and reacquiring the property at its market value at the time of the transfer under the relevant provision referred to in subsection (1)(c). If the property is transferred more than once, the time of disposal and reacquisition is the date of the latest transfer at which its market value can be determined.

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