Commentary

B4.182 Advance pricing agreements — UK rules

Business tax
Business tax | Commentary

B4.182 Advance pricing agreements — UK rules

Business tax | Commentary

B4.182 Advance pricing agreements — UK rules

For UK taxpayers, the method of reaching an advance pricing agreement is included in legislation at TIOPA 2010, ss 218–230 (Part 5) and there is also a Statement of Practice, SP 2/10 on Advance Pricing Agreements and HMRC guidance at INTM422000 onwards. The details are summarised below.

Scope of an APA

A taxpayer may request an APA for matters relating to1:

  1.  

    •     the attribution of income to a branch or agency in the UK where the taxpayer is not a company

  2.  

    •     the attribution of income to a permanent establishment in the UK where the taxpayer is a company

  3.  

    •     the attribution of income to any permanent establishment through which the taxpayer carries on, or propose to carry on, a business

  4.  

    •     the extent to which actual or prospective income of a UK taxpayer arises outside the UK

  5.  

    •     the treatment of transactions between a taxpayer and an associate, and

  6.  

    •     the treatment of transactions between an oil-related ring fenced trade carried on by the taxpayer and other activities carried on by the taxpayer

HMRC state that diverted profits tax (Division D2.7) is a separate, stand-alone charge on diverted profits. It is not income tax, capital gains tax, or corporation tax and is not covered by double taxation treaties. Consequently it is not possible to make it the subject of an APA2.

HMRC consider APA requests only where the issues involved are 'complex'. A transfer pricing issue may be regarded as complex when either reliable

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