Taxation (International and Other Provisions) Act 2010

CHAPTER 2 U.K. Key interpretative provisions

Meaning of certain expressions that first appear in section 147 U.K.

149 “Actual provision” and “affected persons” U.K.

(1) In this Part—

• “the actual provision”, and

• “the affected persons”,

have the meaning given by section 147(1).

(2) Subsection (1) does not apply if Chapters 1 and 3 to 6 apply in accordance with section 205(2) to (4) (oil-related ring-fence trades) but, in that event, in this Part—

• “the actual provision” means the provision mentioned in section 205(1)(b), and

• “the affected persons” means the two persons mentioned in section 205(2).

(3) Subsections (1) and (2) are subject to subsection (4).

(4) If the participation condition (see section 148) would not be met but for section 161 or 162 (cases in which actual provision relates, to any extent, to financing arrangements), then in section 147(1)(d), (2)(b), (3), (4)(b) and (5) “the actual provision” is a reference to the actual provision so far as relating to the financing arrangements concerned.

150 “Transaction” and “series of transactions” U.K.

(1) In this Part “transaction” includes arrangements, understandings and mutual practices (whether or not they are, or are intended to be, legally enforceable).

(2) References in this Part to a series of transactions include references to a number of transactions each entered into (whether or not one after the other) in pursuance of, or in relation to, the same arrangement.

(3) A series of transactions is not prevented by reason only of one or more of the matters mentioned in subsection (4) from being regarded for the purposes of this Part as a series of transactions by means of which provision has been made or imposed as between any two persons.

(4) Those matters are—

(a) that there is no transaction in the series to which both those persons are parties,

(b) that the parties to any arrangement in pursuance of which the transactions in the series are entered into do not include one or both of those persons, and

(c) that there is one or more transactions in the series to which neither of those persons is a party.

(5) In this section “arrangement” means any scheme or arrangement of any kind (whether or not it is, or is intended to be, legally enforceable).

151 “Arm's length provision” U.K.

(1) In this Part “the arm's length provision” has the meaning given by section 147(1).

(2) For the purposes of this Part, the cases in which provision made or imposed as between any two persons is to be taken to differ from the provision that would have been made as between independent enterprises include the case in which provision is made or imposed as between two persons but no provision would have been made as between independent enterprises; and references in this Part to the arm's length provision are to be read accordingly.

[F1 (3) For the purposes of determining the arm’s length provision in relation to the actual provision involving—

(a) the transfer of intangible fixed assets for consideration other than money, or

(b) the grant of a licence or any other right in respect of intangible fixed assets for consideration other than money,

assume that the transfer or grant at arm’s length would be for consideration of a sum of money.

(4) For the purposes of subsection (3) “intangible fixed assets” has the meaning it has in Part 8 of CTA 2009.]

Textual Amendments

F1 S. 151(3)(4) inserted (for chargeable periods commencing on or after 1.1.2026) by Finance Act 2026 (c. 11), Sch. 6 paras. 3, 32(1)

F2 152 Arm's length provision where actual provision relates to securities U.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F2 S. 152 omitted (with effect in accordance with Sch. 6 para. 12 of the amending Act) by virtue of Finance Act 2026 (c. 11), Sch. 6 paras. 4(1), 12

F3 153 Arm's length provision where security issued and guarantee given U.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F3 S. 153 omitted (with effect in accordance with Sch. 6 para. 12 of the amending Act) by virtue of Finance Act 2026 (c. 11), Sch. 6 paras. 4(2), 12

[F4 153A Certain guarantees not capable of being arm’s length U.K.

Where—

(a) the actual provision includes provision for the borrowing of an amount,

(b) the amount would not have been lent between independent enterprises but for a guarantee, and

(c) such a guarantee was provided by a person with whom the borrower has a participatory relationship,

provision for the guarantee (to the extent it relates to the borrowing of that amount) is never to be regarded as arm’s length provision for the purposes of this Part.]

Textual Amendments

F4 S. 153A inserted (with effect in accordance with Sch. 6 para. 12 of the amending Act) by Finance Act 2026 (c. 11), Sch. 6 paras. 4(3), 12

[F5 153B Election for deemed guarantee U.K.

(1) This section applies where the actual provision includes provision for the borrowing of an amount.

(2) A UK resident company (“the deemed guarantor”) with whom the borrower has a qualifying participatory relationship may elect to be treated, in relation to that borrowing—

(a) for the purposes of this Part (as it applies to the deemed guarantor, the borrower and any other person), and

(b) while the deemed guarantor is UK resident and has that relationship,

as having provided a guarantee in respect of so much of the borrowing as is excessive.

(3) Borrowing is excessive to the extent that it—

(a) would not have been lent between independent enterprises but for a guarantee, and

(b) was not the subject of such a guarantee.

(4) The election—

(a) applies at all times when the condition in subsection (2)(b) is met, from the beginning of the day on which the first chargeable period of the borrower for which the election is made commences, and

(b) is irrevocable (so continues indefinitely).

(5) The election—

(a) must specify the first chargeable period of the borrower for which the election is made,

(b) may not be made more than 4 years after the end of that period.

(6) Where the borrower is the subject of a discovery assessment in relation to a chargeable period of the borrower, the deemed guarantor may make an election for that period to be the first chargeable period of the borrower for which the election is made (despite subsection (5)(b)) at any time within the period of one year beginning with the making of that discovery assessment.

(7) Nothing in this section is to be taken as permitting the amendment of a return, or the making of any claim or election, in consequence of an election made under this section after the time for which that amendment, claim or other election could otherwise be made.

(8) Where the lender makes a claim under section 174 or a guarantor makes a claim under section 192 in relation to the provision for the borrowing before the election made under this section, the election only applies to so much of the excessive borrowing as is not taken account of in the calculation of that person’s profits and losses as a result of the claim.

(9) For the purposes of this section—

(a) a participatory relationship is “qualifying” if the participatory relationship does not arise only as a result of any of sections 148A (participation condition treated as met following transfer pricing notice) or 159 to 161 (indirect participation);

(b) “discovery assessment” means—

(i) an assessment under section 29(1) of TMA 1970, or

(ii) a discovery assessment or discovery determination under Schedule 18 to FA 1998 (company tax returns).

(10) See also Chapter 5 for provision about claims by a guarantor (which includes a person making an election under subsection (2)).]

Textual Amendments

F5 S. 153B inserted (with effect in accordance with Sch. 6 para. 12 of the amending Act) by Finance Act 2026 (c. 11), Sch. 6 paras. 4(4), 12

154 Interpretation of sections [F6 153A and 153B] U.K.

F7 (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F7 (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F7 (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) Any reference to a guarantee includes—

(a) a reference to a surety, and

(b) a reference to any other relationship, arrangements, connection or understanding (whether formal or informal) such that the person making the loan to the [F8 borrower] has a reasonable expectation that in the event of a default by the [F8 borrower] the person will be paid by, or out of the assets of, one or more companies.

[F9 (4A) But any implicit support is not to be regarded as a guarantee.]

[F10 (5) A person has a participatory relationship with another person at any time if provision relating to financing arrangements made or imposed between them at that time would meet the participation condition in section 148.]

[F11 (5A) “Borrowing” includes the issuing of a security.

(5B) “Implicit support” means any incidental benefit, in relation to borrowing by a company, that it is reasonable to assume would arise to the company as a result of it having a participatory relationship with one or more other companies.]

F12 (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F13 (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F6 Words in s. 154 heading substituted (with effect in accordance with Sch. 6 para. 12 of the amending Act) by Finance Act 2026 (c. 11), Sch. 6 paras. 4(5)(a), 12

F7 S. 154(1)-(3) omitted (with effect in accordance with Sch. 6 para. 12 of the amending Act) by virtue of Finance Act 2026 (c. 11), Sch. 6 paras. 4(5)(b), 12

F8 Word in s. 154(4)(b) substituted (with effect in accordance with Sch. 6 para. 12 of the amending Act) by Finance Act 2026 (c. 11), Sch. 6 paras. 4(5)(c), 12

F9 S. 154(4A) inserted (with effect in accordance with Sch. 6 para. 12 of the amending Act) by Finance Act 2026 (c. 11), Sch. 6 paras. 4(5)(d), 12

F10 S. 154(5) substituted (with effect in accordance with Sch. 6 para. 12 of the amending Act) by Finance Act 2026 (c. 11), Sch. 6 paras. 4(5)(e), 12

F11 S. 154(5A)(5B) inserted (with effect in accordance with Sch. 6 para. 12 of the amending Act) by Finance Act 2026 (c. 11), Sch. 6 paras. 4(5)(f), 12

F12 S. 154(6) omitted (with effect in accordance with Sch. 6 para. 12 of the amending Act) by virtue of Finance Act 2026 (c. 11), Sch. 6 paras. 4(5)(g), 12

F13 S. 154(7) omitted (with effect in accordance with Sch. 6 para. 12 of the amending Act) by virtue of Finance Act 2026 (c. 11), Sch. 6 paras. 4(5)(g), 12

155 “Potential advantage” in relation to United Kingdom taxation U.K.

(1) Subsection (2) applies for the purposes of this Part.

(2) The actual provision confers a potential advantage on a person in relation to United Kingdom taxation wherever, disregarding this Part, the effect of making or imposing the actual provision, instead of the arm's length provision, would be one or both of Effects A and B.

(3) Effect A is that a smaller amount (which may be nil) would be taken for tax purposes to be the amount of the person's profits for any chargeable period.

(4) Effect B is that a larger amount (or, if there would not otherwise have been losses, any amount of more than nil) would be taken for tax purposes to be the amount for any chargeable period of any losses of the person.

(5) In determining for the purposes of subsection (3) or (4) the amount that would be taken for tax purposes to be the amount of the profits or losses for a year of assessment in the case of a non-UK resident, there is to be left out of account any income of that person which is—

(a) disregarded income within the meaning given by section 813 of ITA 2007 (limits on liability to income tax of non-UK residents), or

(b) disregarded company income within the meaning given by section 816 of that Act.

(6) For the purposes of subsections (2) to (4)—

[F14 (a) Part 10 (corporate interest restriction),]

(b) paragraph E of the list in section 1000(1) of CTA 2010 (excessive interest etc treated as a distribution),

are to be disregarded.

Textual Amendments

F14 S. 155(6)(a) substituted (with effect in accordance with Sch. 5 para. 25(1)(2) of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 5 para. 14

156 “Losses” and “profits” U.K.

(1) In this Part “losses” includes amounts which are not losses but in respect of which relief may be given in accordance with [F15 the Tax Acts including (for example)]—

(a) section 57 of ITTOIA 2005 (pre-trading expenses),

(b) section 88 of ITA 2007 (carry forward of certain interest),

(c) section 61 of CTA 2009 (pre-trading expenses),

(d) sections 387 to 391 of CTA 2009 (insurance companies: non-trading deficits on loan relationships),

(e) Chapter 16 [F16 or Chapter 16A] of Part 5 of CTA 2009 (non-trading deficits on loan relationships),

(f) section 1223 of CTA 2009 (excess of management expenses), F17 ...

(g) Part 5 of CTA 2010 (group relief) [F18 , or

(h) Part 5A of CTA 2010 (group relief for carried-forward losses).]

(2) In this Part “profits” includes income.

Textual Amendments

F15 Words in s. 156(1) inserted (for chargeable periods commencing on or after 1.1.2026) by Finance Act 2026 (c. 11), Sch. 6 paras. 17, 32(1)

F16 Words in s. 156(1)(e) inserted (with effect in accordance with Sch. 4 para. 190 of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 4 para. 178(a)

F17 Word in s. 156(1)(f) omitted (with effect in accordance with Sch. 4 para. 190 of the amending Act) by virtue of Finance (No. 2) Act 2017 (c. 32), Sch. 4 para. 178(b)

F18 S. 156(1)(h) and word inserted (with effect in accordance with Sch. 4 para. 190 of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 4 para. 178(c)

“Direct participation” in management, control or capital of a person U.K.

157 Direct participation U.K.

(1) Subsection (2) applies for the purposes of—

(a) this Part [F19 (other than for the purposes of section 148A(1)(c))],

(b) in Part 2, section 132(7), F20 ...

(c) in Part 5, section 219(2) [F21 , F22 ...

(d) in Part 6A, section 259NB(4)] [F23 , F24 ... [F25 , and]

(e) in Part 10, section 463(4)]F26 ...

F26 (f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) A person is directly participating in the management, control or capital of another person at a particular time if (and only if) that other person is at that time—

(a) a body corporate or a firm, and

(b) controlled by the first person.

[F27 (3) See also section 162A, which provides for circumstance in which a person will be regarded as having control of another.]

Textual Amendments

F19 Words in s. 157(1)(a) inserted (18.3.2026 for chargeable periods commencing on or after 1.1.2026) by Finance Act 2026 (c. 11), Sch. 6 paras. 2(2), 32(1)

F20 Word in s. 157(1)(b) omitted (15.9.2016) by virtue of Finance Act 2016 (c. 24), Sch. 10 para. 11(a)

F21 S. 157(1)(d) and word inserted (15.9.2016) by Finance Act 2016 (c. 24), Sch. 10 para. 11(b)

F22 Word in s. 157(1)(c) omitted (with effect in accordance with Sch. 5 para. 25(1)(2) of the amending Act) by virtue of Finance (No. 2) Act 2017 (c. 32), Sch. 5 para. 15(a)

F23 S. 157(1)(e) and word inserted (with effect in accordance with Sch. 5 para. 25(1)(2) of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 5 para. 15(b)

F24 Word in s. 157(1)(d) omitted (with effect in accordance with Sch. 3 para. 7 of the amending Act) by virtue of Finance Act 2019 (c. 1), Sch. 3 para. 6(2)(a)

F25 Word in s. 157(1)(d) inserted (with effect in accordance with s. 20(12) of the amending Act) by Finance Act 2025 (c. 8), s. 20(7)(a)(12)

F26 S. 157(1)(f) and word omitted (with effect in accordance with s. 20(12) of the amending Act) by virtue of Finance Act 2025 (c. 8), s. 20(7)(b)(12)

F27 S. 157(3) inserted (for chargeable periods commencing on or after 1.1.2026) by Finance Act 2026 (c. 11), Sch. 6 paras. 14(2), 32(1)

Modifications etc. (not altering text)

C1 S. 157(2) applied (with effect in accordance with s. 116(1) of the amending Act) by Finance Act 2015 (c. 11), s. 106(7)(a)

C2 S. 157(2) applied by 2010 c. 4, s. 356OT(7) (as inserted (with effect in accordance with s. 81 of the amending Act) by Finance Act 2016 (c. 24), s. 77(1) (and also with effect in accordance with Finance (No. 2) Act 2017 (c. 32), s. 39(1)(2)))

C3 S. 157(2) applied by 2007 c. 3, s. 517U(7) (as inserted (with effect in accordance with s. 82 of the amending Act) by Finance Act 2016 (c. 24), s. 79(1) (and also with effect in accordance with Finance (No. 2) Act 2017 (c. 32), s. 39(1)(2)))

“Indirect participation” in management, control or capital of a person U.K.

158 Indirect participation: defined by sections 159 to [F28 161] U.K.

(1) This section is about how to read the references, in this Part and in some other provisions of this Act, to indirect participation.

(2) For the purposes of sections [F29 148(2) and (3) and 175], a person is indirectly participating in the management, control or capital of another person only if section 159, 160 or 161 so provides.

F30 (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) For the purposes of—

(a) sections 154(5) and 204(4),

(b) in Part 2, section 132(7), F31 ...

F32 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [F33 , and

(d) in Part 6A, section 259NB(4),]

a person is indirectly participating in the management, control or capital of another person only if section 159 or 160 so provides.

[F34 (5) For the purposes of section 219(2) (which is in Part 5), a person is indirectly participating in the management, control or capital of another person only if any of sections 159 to 162 so provide.]

Textual Amendments

F28 Word in s. 158 heading substituted (for chargeable periods commencing on or after 1.1.2026) by Finance Act 2026 (c. 11), Sch. 6 paras. 13(3)(a), 32(1)

F29 Words in s. 158(2) substituted (with effect in accordance with Sch. 6 para. 12 of the amending Act) by Finance Act 2026 (c. 11), Sch. 6 paras. 4(9)(a), 12

F30 S. 158(3) omitted (for chargeable periods commencing on or after 1.1.2026) by virtue of Finance Act 2026 (c. 11), Sch. 6 paras. 13(3)(b), 32(1)

F31 Word in s. 158(4)(b) omitted (15.9.2016) by virtue of Finance Act 2016 (c. 24), Sch. 10 para. 12(a)

F32 S. 158(4)(c) omitted (retrospectively) by virtue of Finance Act 2025 (c. 8), s. 22(1)(a)(5)

F33 S. 158(4)(d) and word inserted (15.9.2016) by Finance Act 2016 (c. 24), Sch. 10 para. 12(b)

F34 S. 158(5) inserted (retrospectively) by Finance Act 2025 (c. 8), s. 22(1)(b)(5)

Modifications etc. (not altering text)

C4 Ss. 158-163 applied (with modifications) (with effect in accordance with s. 116(1) of the amending Act) by Finance Act 2015 (c. 11), s. 106(7)(b)

C5 S. 158(4) applied by 2007 c. 3, s. 517U(7) (as inserted (with effect in accordance with s. 82 of the amending Act) by Finance Act 2016 (c. 24), s. 79(1) (and also with effect in accordance with Finance (No. 2) Act 2017 (c. 32), s. 39(1)(2)))

C6 S. 158(4) applied by 2010 c. 4, s. 356OT(7) (as inserted (with effect in accordance with s. 81 of the amending Act) by Finance Act 2016 (c. 24), s. 77(1) (and also with effect in accordance with Finance (No. 2) Act 2017 (c. 32), s. 39(1)(2)))

159 Indirect participation: potential direct participant U.K.

(1) Subsection (2) applies for the purposes of—

(a) sections 148(2) and (3), 154(5), [F35 175] and 204(4),

(b) in Part 2, section 132(7), F36 ...

(c) in Part 5, section 219(2) [F37 , F38 ...

(d) in Part 6A, section 259NB(4)] [F39 , F40 ... [F41 , and]

(e) in Part 10, section 463(4)], F42 ...

F42 (f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) A person (“P”) is indirectly participating in the management, control or capital of another person (“A”) at a particular time if P would be directly participating in the management, control or capital of A at that time if the rights and powers attributed to P included all the rights and powers mentioned in subsection (3) that are not already attributed to P for the purpose of deciding under section 157 whether P is directly participating in the management, control or capital of A.

(3) The rights and powers referred to in subsection (2) are—

(a) rights and powers which P is entitled to acquire at a future date,

(b) rights and powers which P will, at a future date, become entitled to acquire,

(c) rights and powers of persons other than P so far as they are rights or powers falling within subsection (4),

(d) rights and powers of any person with whom P is connected (see section 163), and

(e) rights and powers which would be attributed by subsection (2) to a person with whom P is connected were it being decided under that subsection whether that connected person is indirectly participating in the management, control or capital of A.

(4) Rights and powers fall within this subsection so far as they—

(a) are required, or may be required, to be exercised in any one or more of the following ways—

(i) on behalf of P,

(ii) under the direction of P, or

(iii) for the benefit of P, and

(b) are not confined, in a case where a loan has been made by one person to another, to rights and powers conferred in relation to property of the borrower by the terms of any security relating to the loan.

(5) In subsections (3)(c) to (e) and (4), the references to a person's rights and powers include references to any rights or powers which the person either—

(a) is entitled to acquire at a future date, or

(b) will, at a future date, become entitled to acquire.

(6) In paragraph (e) of subsection (3), the reference to rights and powers which would be attributed to a connected person includes a reference to rights and powers which, by applying that paragraph wherever one person is connected with another, would be so attributed to the connected person through a number of persons each of whom is connected with at least one of the others.

(7) References in this section—

(a) to rights and powers of a person, or

(b) to rights and powers which a person is or will become entitled to acquire,

include references to rights or powers which are exercisable by that person, or (when acquired by that person) will be exercisable, only jointly with one or more other persons.

Textual Amendments

F35 Word in s. 159(1)(a) substituted (with effect in accordance with Sch. 6 para. 12 of the amending Act) by Finance Act 2026 (c. 11), Sch. 6 paras. 4(9)(b), 12

F36 Word in s. 159(1)(b) omitted (15.9.2016) by virtue of Finance Act 2016 (c. 24), Sch. 10 para. 13(a)

F37 S. 159(1)(d) and word inserted (15.9.2016) by Finance Act 2016 (c. 24), Sch. 10 para. 13(b)

F38 Word in s. 159(1)(c) omitted (with effect in accordance with Sch. 5 para. 25(1)(2) of the amending Act) by virtue of Finance (No. 2) Act 2017 (c. 32), Sch. 5 para. 16(a)

F39 S. 159(1)(e) and word inserted (with effect in accordance with Sch. 5 para. 25(1)(2) of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 5 para. 16(b)

F40 Word in s. 159(1)(d) omitted (with effect in accordance with Sch. 3 para. 7 of the amending Act) by virtue of Finance Act 2019 (c. 1), Sch. 3 para. 6(3)(a)

F41 Word in s. 159(1)(d) inserted (with effect in accordance with s. 20(12) of the amending Act) by Finance Act 2025 (c. 8), s. 20(8)(a)(12)

F42 S. 159(1)(f) and word omitted (with effect in accordance with s. 20(12) of the amending Act) by virtue of Finance Act 2025 (c. 8), s. 20(8)(b)(12)

Modifications etc. (not altering text)

C4 Ss. 158-163 applied (with modifications) (with effect in accordance with s. 116(1) of the amending Act) by Finance Act 2015 (c. 11), s. 106(7)(b)

C7 S. 159(2) applied by 2010 c. 4, s. 356OT(7) (as inserted (with effect in accordance with s. 81 of the amending Act) by Finance Act 2016 (c. 24), s. 77(1) (and also with effect in accordance with Finance (No. 2) Act 2017 (c. 32), s. 39(1)(2)))

C8 S. 159(2) applied by 2007 c. 3, s. 517U(7) (as inserted (with effect in accordance with s. 82 of the amending Act) by Finance Act 2016 (c. 24), s. 79(1) (and also with effect in accordance with Finance (No. 2) Act 2017 (c. 32), s. 39(1)(2)))

160 Indirect participation: one of several major participants U.K.

(1) Subsection (2) applies for the purposes of—

(a) sections 148(2) and (3), 154(5), [F43 175] and 204(4),

(b) in Part 2, section 132(7), F44 ...

(c) in Part 5, section 219(2) [F45 , F46 ...

(d) in Part 6A, section 259NB(4)] [F47 , F48 ...

(e) in Part 10, section 463(4)]F49 ...

F49 (f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) A person is indirectly participating in the management, control or capital of another person at a particular time if the first person is, at that time, one of a number of major participants in that other person's enterprise.

(3) For the purposes of this section, a person (“A”) is a major participant in another person's enterprise at a particular time if at that time—

(a) that other person (“the subordinate”) is a body corporate or firm, and

(b) the 40% test is met in the case of each of two persons—

(i) who, taken together, control the subordinate, and

(ii) of whom one is A.

(4) For the purposes of this section, the 40% test is met in the case of each of two persons wherever each of them has interests, rights and powers representing at least 40% of the holdings, rights and powers in respect of which the pair of them fall to be taken as controlling the subordinate.

(5) For the purposes of this section—

(a) the question whether a person is controlled by any two or more persons taken together, and

(b) any question whether the 40% test is met in the case of a person who is one of two persons,

is to be determined after attributing to each of the persons all the rights and powers which would be attributed by section 159(2) to a person were it being decided under section 159(2) whether that person is indirectly participating in the management, control or capital of another person.

(6) References in this section—

(a) to rights and powers of a person, or

(b) to rights and powers which a person is or will become entitled to acquire,

include references to rights or powers which are exercisable by that person, or (when acquired by that person) will be exercisable, only jointly with one or more other persons.

Textual Amendments

F43 Word in s. 160(1)(a) substituted (with effect in accordance with Sch. 6 para. 12 of the amending Act) by Finance Act 2026 (c. 11), Sch. 6 paras. 4(9)(c), 12

F44 Word in s. 160(1)(b) omitted (15.9.2016) by virtue of Finance Act 2016 (c. 24), Sch. 10 para. 14(a)

F45 S. 160(1)(d) and word inserted (15.9.2016) by Finance Act 2016 (c. 24), Sch. 10 para. 14(b)

F46 Word in s. 160(1)(c) omitted (with effect in accordance with Sch. 5 para. 25(1)(2) of the amending Act) by virtue of Finance (No. 2) Act 2017 (c. 32), Sch. 5 para. 17(a)

F47 S. 160(1)(e) and word inserted (with effect in accordance with Sch. 5 para. 25(1)(2) of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 5 para. 17(b)

F48 Word in s. 160(1)(d) omitted (with effect in accordance with Sch. 3 para. 7 of the amending Act) by virtue of Finance Act 2019 (c. 1), Sch. 3 para. 6(4)(a)

F49 S. 160(1)(f) and word omitted (with effect in accordance with s. 20(12) of the amending Act) by virtue of Finance Act 2025 (c. 8), s. 20(9)(12)

Modifications etc. (not altering text)

C4 Ss. 158-163 applied (with modifications) (with effect in accordance with s. 116(1) of the amending Act) by Finance Act 2015 (c. 11), s. 106(7)(b)

C9 S. 160(2) applied by 2007 c. 3, s. 517U(7) (as inserted (with effect in accordance with s. 82 of the amending Act) by Finance Act 2016 (c. 24), s. 79(1) (and also with effect in accordance with Finance (No. 2) Act 2017 (c. 32), s. 39(1)(2)))

C10 S. 160(2) applied by 2010 c. 4, s. 356OT(7) (as inserted (with effect in accordance with s. 81 of the amending Act) by Finance Act 2016 (c. 24), s. 77(1) (and also with effect in accordance with Finance (No. 2) Act 2017 (c. 32), s. 39(1)(2)))

[F50 161 Indirect participation: involvement in financing arrangements U.K.

(1) At any time this subsection applies, a person (“P”), with a qualifying interest in a body corporate or firm (“A”) is to be regarded as indirectly participating in the management, control or capital of A for the purposes of applying any of—

(a) section 148(2) or (3) (participation condition),

(b) section 175 (application of section 174 where guarantee disallowed), or

(c) section 219(2) (in Part 5),

in relation to provision comprising financing arrangements for A to which P and one or more other persons with a qualifying interest in A are party.

(2) Subsection (1) applies at any time if—

(a) one or more of those other persons act together (within the meaning given by subsection (4)) with P in relation to A, or have acted together in relation to A within the previous 6 months, and

(b) if all of the rights and powers of P and each of the persons mentioned in paragraph (a) were held by one person (“H”), that person would be taken to have control of A.

(3) In determining whether H would be taken to have control of A, the rights and powers of any person (and not just H) are to be taken to include those that would be attributed to that person by section 159(2) were it being decided under section 159(2) whether that person is indirectly participating in the management, control or capital of A.

(4) A person (“Q”) with a qualifying interest in another person (“B”), and another person (“U”) with such an interest, are to be regarded as acting together in relation to B if at any time while they both hold such an interest—

(a) Q and U are connected (within the meaning of section 163),

(b) for the purposes of influencing the conduct of B’s affairs—

(i) Q is able to secure that U acts in accordance with Q's wishes,

(ii) U can reasonably be expected to act, or typically acts, in accordance with Q's wishes,

(iii) U is able to secure that Q acts in accordance with U's wishes, or

(iv) Q can reasonably be expected to act, or typically acts, in accordance with U's wishes, or

(c) Q and U are party to any financing arrangements for B to which Q and U are party that—

(i) it is reasonable to suppose is designed to affect the value of any of U's or Q’s rights or interests in relation to B, or

(ii) relates to the exercise of any of U's or Q’s rights in relation to B.

(5) But for the purposes of subsection (4), ignore any rights or powers of Q that only arise as a result of loan made by Q and that are conferred in relation to property of U by the terms of any security relating to the loan.

(6) A person (“R”) has a qualifying interest in a company (“C”) if it is reasonable to suppose that—

(a) R possesses, or is entitled to acquire, any amount of the share capital or issued share capital of C,

(b) R possesses, or is entitled to acquire, any amount of the voting power in C, or

(c) if the whole of C's share capital were disposed of, R would receive (directly or indirectly and whether at the time of disposal or later) any amount of the proceeds of the disposal, other than as a result only of the terms of a normal commercial loan under which R is the creditor of C.

(7) A person (“R”) has an qualifying interest in a firm (“F”) if it is reasonable to suppose that, other than as a result only of the terms of a normal commercial loan under which R is the creditor of F—

(a) if the whole of the income of the firm were distributed, R would receive (directly or indirectly and whether at the time of the distribution or later) any amount of the distributed amount, or

(b) in the event of a winding-up of the firm or in any other circumstances, R would receive (directly or indirectly and whether or not at the time of the winding-up or other circumstances or later) any amount of F's assets which would then be available for distribution.

(8) In this section—

• “arrangements” includes any agreement, understanding, scheme, transaction or series of transactions, whether or not legally enforceable;

• “financing arrangements” means arrangements made for providing or guaranteeing, or otherwise in connection with, any debt, capital or other form of finance;

• “normal commercial loan” means a loan which is a normal commercial loan for the purposes of section 158(1)(b) or 159(4)(b) of CTA 2010.]

Textual Amendments

F50 S. 161 substituted (for chargeable periods commencing on or after 1.1.2026) by Finance Act 2026 (c. 11), Sch. 6 paras. 13(1), 32(1)

Modifications etc. (not altering text)

C4 Ss. 158-163 applied (with modifications) (with effect in accordance with s. 116(1) of the amending Act) by Finance Act 2015 (c. 11), s. 106(7)(b)

F52 162 Indirect participation: sections 148 [F51 , 175 and 219(2)]: further financing cases U.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F51 Words in s. 162 heading substituted (retrospectively) by Finance Act 2025 (c. 8), s. 22(3)(b)(5)

F52 S. 162 omitted (for chargeable periods commencing on or after 1.1.2026) by virtue of Finance Act 2026 (c. 11), Sch. 6 paras. 13(2), 32(1)

Modifications etc. (not altering text)

C4 Ss. 158-163 applied (with modifications) (with effect in accordance with s. 116(1) of the amending Act) by Finance Act 2015 (c. 11), s. 106(7)(b)

[F53 162A Agreements for common management U.K.

(1) Where a person (“A”) and another person (“B”) are the subject of common management arrangements, each of A and B is to be treated, for the purposes of this Chapter, as having control of the other.

(2) Common management arrangements means arrangements that—

(a) result in the management of A and B by the same person or group of persons, and

(b) include a mechanism that it is reasonable to suppose is intended to secure that the economic interests of shareholders in A and B being aligned.

(3) In this section “arrangements” includes any agreement, understanding, scheme, transaction or series of transactions, whether or not legally enforceable.]

Textual Amendments

F53 S. 162A inserted (for chargeable periods commencing on or after 1.1.2026) by Finance Act 2026 (c. 11), Sch. 6 paras. 14(1), 32(1)

[F54 162B Arrangements to avoid participation condition U.K.

(1) Any arrangements that would result in the participation condition not being met are to be disregarded if the main purpose, or one of the main purposes, of the arrangements is to secure that the participation condition is not met.

(2) In this section “arrangements” includes any agreement, understanding, scheme, transaction or series of transactions, whether or not legally enforceable.]

Textual Amendments

F54 S. 162B inserted (for chargeable periods commencing on or after 1.1.2026) by Finance Act 2026 (c. 11), Sch. 6 paras. 15, 32(1)

163 Meaning of “connected” in [F55 sections 159 and 161] U.K.

(1) Subsections (2) and (3) apply for the purposes of [F56 sections 159 and 161] and this section.

(2) Two persons are connected with each other if one of them is an individual and the other is—

(a) the individual's spouse or civil partner,

(b) a relative of the individual,

(c) a relative of the individual's spouse or civil partner, or

(d) the spouse, or civil partner, of a person within paragraph (b) or (c).

(3) Two persons are connected with each other if one of them is a trustee of a settlement and the other is—

(a) a person who in relation to that settlement is a settlor, or

(b) a person who is connected with a person within paragraph (a).

(4) In this section—

• “relative” means brother, sister, ancestor or lineal descendant, and

• “settlement” and “settlor” have the same meaning as in section 620 of ITTOIA 2005.

Textual Amendments

F55 Words in s. 163 heading substituted (for chargeable periods commencing on or after 1.1.2026) by Finance Act 2026 (c. 11), Sch. 6 paras. 13(4)(a), 32(1)

F56 Words in s. 163(1) substituted (for chargeable periods commencing on or after 1.1.2026) by Finance Act 2026 (c. 11), Sch. 6 paras. 13(4)(b), 32(1)

Modifications etc. (not altering text)

C4 Ss. 158-163 applied (with modifications) (with effect in accordance with s. 116(1) of the amending Act) by Finance Act 2015 (c. 11), s. 106(7)(b)

Application of OECD principles U.K.

164 Part to be interpreted in accordance with OECD principles U.K.

(1) This Part is to be read in such manner as best secures consistency between—

(a) the effect given to sections 147(1)(a), (b) and (d) and (2) to (6), 148 [F57 , 148A] [F58 , 154(5B)] and 151(2), and

[F59 (b) the effect that would be given under double taxation arrangements that incorporate the OECD model in accordance with the transfer pricing guidelines.]

(2) Subsection (1) has effect subject to—

• section 147(1)(c) and (7) (oil-related provision to which Part does not apply),

• sections 205 and 206 (rules for oil-related ring-fence trades), [F60 and]

• section 217(3) to (7) (provision for sales of oil),

• F61 ...

• .

[F62 (3) In this section “the OECD model” means the rules contained in Article 9 of the Model Tax Convention on Income and on Capital approved by the OECD Council on 18 November 2025, as interpreted in accordance with, or supplemented by, the OECD’s commentary on that Article, also approved on that date.

(4) In this section “the transfer pricing guidelines” means the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations 2022 published by the OECD on 20th January 2022 as interpreted in accordance with, or supplemented by, such documents as may be published by the OECD from time to time as are relevant to the application of those guidelines.

(4A) The reference to the Model Tax Convention approved on 18 November 2025, the OECD commentary approved on that date or the OECD Transfer Pricing Guidelines published on 20th January 2022, is to that document as it may be amended or replaced from time to time.

(4B) And each of those documents, and any other document referred to in subsection (4), is to be read in accordance with any reservation, declaration or election made by the United Kingdom in relation to that document.

(4C) The Treasury may by regulations make provision—

(a) for subsection (4A) not to apply in relation to any specified amendment or replacement of the OECD model or the OECD Transfer Pricing Guidelines,

(b) providing that the reference in subsection (4) to other documents is not to include any specified document, and

(c) about the effect of any provision of any document referred to in subsection (4) that has been published, amended or replaced on or after 26 November 2025 where that provision is elective (however expressed).]

[F63 (4) In this section “the transfer pricing guidelines” means—

(a) the version of the Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations approved by the Organisation for Economic Co-operation and Development (OECD) on 22 July 2010 [F64 as revised by the report, Aligning Transfer Pricing Outcomes with Value Creation, Actions 8-10 - 2015 Final Reports, published by the OECD on 5 October 2015] , or

(b) such other document approved and published by the OECD in place of that (or a later) version or in place of those Guidelines as is designated for the time being by order made by the Treasury,

including, in either case, [F65 material which is ] published by the OECD as part of (or by way of update or supplement to) the version or other document concerned [F66 and which is designated for the time being by order made by the Treasury] .]

(5) In this section “double taxation arrangements” means arrangements that have effect under section 2(1) (double taxation relief by agreement with territories outside the United Kingdom).

Textual Amendments

F57 Word in s. 164(1)(a) inserted (for chargeable periods commencing on or after 1.1.2026) by Finance Act 2026 (c. 11), Sch. 6 paras. 2(3), 32(1)

F58 Words in s. 164(1)(a) inserted (with effect in accordance with Sch. 6 para. 12 of the amending Act) by Finance Act 2026 (c. 11), Sch. 6 paras. 4(6), 12

F59 S. 164(1)(b) substituted (for chargeable periods commencing on or after 1.1.2026) by Finance Act 2026 (c. 11), Sch. 6 paras. 18(a), 32(1)

F60 Word in s. 164(2) inserted (for chargeable periods commencing on or after 1.1.2026) by Finance Act 2026 (c. 11), Sch. 6 paras. 30(4)(c)(i), 32(1) (with Sch. 6 para. 32(3))

F61 Words in s. 164(2) omitted (for chargeable periods commencing on or after 1.1.2026) by virtue of Finance Act 2026 (c. 11), Sch. 6 paras. 30(4)(c)(ii), 32(1) (with Sch. 6 para. 32(3))

F62 S. 164(3)-(4C) substituted for s. 164(3) (18.3.2026 for chargeable periods commencing on or after 1.1.2026) by Finance Act 2026 (c. 11), Sch. 6 paras. 18(b), 32(1)

F63 S. 164(4) substituted (with effect in accordance with s. 58(2) of the amending Act) by Finance Act 2011 (c. 11), s. 58(1)

F64 Words in s. 164(4)(a) inserted (with effect in accordance with s. 75(3) of the amending Act) by Finance Act 2016 (c. 24), s. 75(1)(a)

F65 Words in s. 164(4) substituted (with effect in accordance with s. 75(3) of the amending Act) by Finance Act 2016 (c. 24), s. 75(1)(b)(i)

F66 Words in s. 164(4) substituted (with effect in accordance with s. 75(3) of the amending Act) by Finance Act 2016 (c. 24), s. 75(1)(b)(ii)