Commentary

B4.124 Transfer pricing meaning of participation

Business tax
Business tax | Commentary

B4.124 Transfer pricing meaning of participation

Business tax | Commentary

B4.124 Transfer pricing meaning of participation

The transfer pricing rules can only apply if the participation condition between the two affected persons (see B4.121) is met1. This condition is that:

  1.  

    •     one of the affected persons was directly or indirectly participating in the management, control or capital of the other, or

  2.  

    •     the same person was directly or indirectly participating in the management, control or capital of each of the affected persons

For non-financing arrangements this condition is applied at the time of making the actual provision, for financing arrangement the condition is also applied for the previous six months to the date of making the actual provision2. HMRC guidance can be found at INTM412060 and for more details on financing arrangements see B4.149.

Direct participation for transfer pricing rules

A person directly participates in the management, control or capital of another person at a particular time only where one of the persons is a body corporate or a firm which is controlled by the other person3. This therefore excludes from the scope of the transfer pricing provisions any transaction between two individuals. A person would include

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