MTT21130 | Calculating the effective tax rate: Adjusted profits: Relevant share acquisition adjustments

A purchase accounting adjustment is not to be reflected in the adjusted profits if it is a relevant share acquisition adjustment. An adjustment will be required if the underlying profit contain such items, in accordance with section 140 of Finance (No.2) Act 2023.

However, an adjustment is not required if:

• the acquisition of ownership interests occurred before 1 December 2021, and

• the members of the group do not have sufficient records to identify the adjustment made with reasonable accuracy.

Relevant share acquisition adjustment

A ‘relevant share acquisition adjustment’ is an adjustment to the group’s consolidated financial statements that arises because an existing member of the group has acquired ownership interests in an entity, and that acquisition has resulted in the entity becoming a member of the group.