Taxation (International and Other Provisions) Bill

House of Commons

Session 2009 - 10
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Other Bills before Parliament

Taxation (International and Other Provisions) Bill

Taxation (International and Other Provisions) Bill
Part 4 — Transfer pricing
Chapter 4 — Position, if only one affected person potentially advantaged, of other affected person
106

177
Time for making, or amending, claim under section 174
(1)
A claim under section 174 can be made only in the period mentioned in
subsection (2) or (3).
(2)
If a return has been made by the advantaged person on the basis mentioned in
section 176(1), the period is the two years beginning with the day of the making
5
of the return.
(3)
If a relevant notice (see section 190) taking account of such a determination as
is mentioned in section 176(3)(b) has been given to the advantaged person, the
period is the two years beginning with the day on which that notice was given.
(4)
Subsection (5) applies if—
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(a)
a claim under section 174 is made in relation to a return made on the
basis mentioned in section 176(1), and
(b)
a relevant notice taking account of such a determination as is
mentioned in section 176(3)(b) is subsequently given to the advantaged
person.
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(5)
The disadvantaged person is entitled, within the period mentioned in
subsection (3), to make any such amendment of the claim as may be
appropriate in consequence of the determination contained in the relevant
notice.
(6)
Subsections (1) and (5) have effect subject to section 186(3) (which provides for
20
the extension of the period for making or amending a claim).
178
Meaning of “return” in sections 176 and 177
(1)
In sections 176 and 177 “return” means—
(a)
any return required to be made under TMA 1970 or under Schedule 18
to FA 1998 for income tax or corporation tax purposes, or
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(b)
any voluntary amendment of a return within paragraph (a).
(2)
In subsection (1)(b) “voluntary amendment” means—
(a)
an amendment under section 9ZA or 12ABA of TMA 1970 (amendment
of personal, trustee or partnership return by taxpayer), or
(b)
an amendment under Schedule 18 to FA 1998 other than one made in
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response to the giving of a relevant notice (see section 190).
Claims: special cases
179
Compensating payment if advantaged person is controlled foreign company
(1)
Subsection (2) applies if—
(a)
the actual provision is provision made or imposed in relation to a
35
controlled foreign company,
(b)
in determining for the purposes of Chapter 4 of Part 17 of ICTA the
amount of that company’s chargeable profits for an accounting period,
its profits and losses are to be calculated in accordance with section
147(3) or (5) in the case of that provision,
40
(c)
the whole of those chargeable profits are to be apportioned under
section 747(3) of ICTA to one or more companies resident in the United
Kingdom, and

Taxation (International and Other Provisions) Bill
Part 4 — Transfer pricing
Chapter 4 — Position, if only one affected person potentially advantaged, of other affected person
107

(d)
tax is chargeable under section 747(4) of ICTA in respect of the whole
of those chargeable profits, as so apportioned to those companies.
(2)
Sections 174 to 178 have effect as if the controlled foreign company were a
person on whom a potential advantage in relation to United Kingdom taxation
were conferred by the actual provision.
5
(3)
In applying sections 174 to 178 in a case in which they apply because of
subsection (2)—
(a)
references to the advantaged person in sections 176(3)(a) and (b) and
177(2), (3) and (4)(b) include a reference to any of the companies
mentioned in subsection (1)(c), and
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(b)
references to corporation tax include a reference to tax chargeable
under section 747(4) of ICTA.
(4)
In this section—
“controlled foreign company” has the same meaning as in Chapter 4 of
Part 17 of ICTA, and
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“accounting period”, in relation to a controlled foreign company, has the
same meaning as in that Chapter.
180
Application of section 174(2)(a) in relation to transfers of trading stock etc
(1)
Section 174(2)(a) does not affect the credits to be brought into account by the
disadvantaged person in respect of—
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(a)
closing trading stock, or
(b)
closing work in progress in a trade,

for accounting periods ending on or after the day given by subsection (2).
(2)
That day is the last day of the accounting period of the advantaged person in
which the actual provision was made or imposed.
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(3)
For the purposes of this section “trading stock”, in relation to any trade, has the
meaning given by—
(a)
section 174 of ITTOIA 2005, or
(b)
section 163 of CTA 2009.
Alternative way of claiming if a security is involved
30
181
Section 182 applies to claims where actual provision relates to a security
(1)
Subsection (2) applies if—
(a)
both of the affected persons are companies, and
(b)
the actual provision is provision in relation to a security issued by one
of those companies.
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(2)
A claim under section 174 may be made in accordance with section 182.
(3)
For the purposes of this Part, a “section 182 claim” is a claim under section 174
made in accordance with section 182.
(4)
In subsections (1)(b) and (5)(a) “security” includes securities not creating or
evidencing a charge on assets.
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(5)
For the purposes of subsection (1)(b), any—

Taxation (International and Other Provisions) Bill
Part 4 — Transfer pricing
Chapter 4 — Position, if only one affected person potentially advantaged, of other affected person
108

(a)
interest payable by a company on money advanced without the issue
of a security for the advance, or
(b)
other consideration given by a company for the use of money so
advanced,

is to be treated as if payable or given in respect of a security issued for the
5
advance by the company, and references to a security are to be read
accordingly.
182
Making of section 182 claims
(1)
A section 182 claim may be made by—
(a)
the disadvantaged person, or
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(b)
the advantaged person.
(2)
A section 182 claim made by the advantaged person is to be taken to be made
on behalf of the disadvantaged person.
(3)
A section 182 claim may be made before or after a calculation within section
176(1) has been made.
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(4)
A section 182 claim must be made either—
(a)
at any time before the end of the period mentioned in section 177(2), or
(b)
within the period mentioned in section 177(3).
(5)
Subsection (4) has effect subject to section 186(3) (which provides for the
extension of the period for making a claim).
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183
Giving effect to section 182 claims
(1)
A section 182 claim is not a claim within paragraph 57 or 58 of Schedule 18 to
FA 1998 (company tax returns, assessments and related matters).
(2)
Accordingly, paragraph 59 of that Schedule (application of Schedule 1A to
TMA 1970) has effect in relation to a section 182 claim.
25
(3)
If—
(a)
a section 182 claim is made before a calculation within section 176(1)
has been made,
(b)
such a calculation is subsequently made, and
(c)
the claim is not consistent with the calculation,
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the affected persons are to be treated as if (instead of the claim actually made)
a claim had been made that was consistent with the calculation.
(4)
All such adjustments are to be made (including by the making of assessments)
as are required to give effect to subsection (3).
(5)
Subsection (4) has effect despite any limit on the time within which any
35
adjustment may be made.
184
Amending a section 182 claim if it is followed by relevant notice
(1)
Subsection (2) applies if—
(a)
a section 182 claim is made,
(b)
a return is subsequently made by the advantaged person on the basis
40
mentioned in section 176(1), and

Taxation (International and Other Provisions) Bill
Part 4 — Transfer pricing
Chapter 4 — Position, if only one affected person potentially advantaged, of other affected person
109

(c)
a relevant notice (see section 190) taking account of such a
determination as is mentioned in section 176(3)(b) is subsequently
given to the advantaged person.
(2)
If any amendment of the claim is appropriate in consequence of the
determination contained in the relevant notice, the amendment may be made
5
by—
(a)
the disadvantaged person, or
(b)
the advantaged person.
(3)
If an amendment under subsection (2) is made by the advantaged person it is
to be taken to be made on behalf of the disadvantaged person.
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(4)
Any amendment under subsection (2) must be made within the period
mentioned in section 177(3).
(5)
Subsection (4) has effect subject to section 186(3) (which provides for the
extension of the period for making an amendment).
Notification to persons who may be disadvantaged
15
185
Notice to potential claimants
(1)
Subsection (2) applies if—
(a)
a relevant notice (see section 190) is given to any person,
(b)
the notice, or anything contained in it, takes account of a transfer-
pricing determination, and
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(c)
it appears to an officer that there is a person (“DP”) who is or may be a
disadvantaged person by reference to the subject-matter of the
determination.
(2)
The officer must give to DP a notice containing particulars of the
determination.
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(3)
A contravention of subsection (2) does not affect the validity—
(a)
of the relevant notice, or
(b)
of any determination to which the notice relates.
(4)
For the purposes of this section, a person is a disadvantaged person by
reference to the subject-matter of a transfer-pricing determination if (and only
30
if) the person—
(a)
is entitled, in consequence of the making of the determination, to make
or amend a claim under section 174, or
(b)
will be entitled, because of section 212(3), to be a party to any
proceedings on an appeal relating to the determination.
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(5)
In this section—
“officer” means officer of Revenue and Customs, and
“transfer-pricing determination” means a determination of an amount
that is to be brought into account for tax purposes in respect of—
(a)
any assumption made under section 147(3) or (5), or
40
(b)
any advance-pricing-agreement assumptions (see section
222(6)).