PART 1Income tax, corporation tax and capital gains tax

CHAPTER 4Other provisions

Transfer pricing

75Transfer pricing: restriction on claims for compensation adjustments

1

Chapter 4 of Part 4 of TIOPA 2010 (transfer pricing: position of disadvantaged person) is amended as follows.

2

In section 174 (claim by the affected person who is potentially advantaged), in subsection (3), before the entry for section 175 insert— “ section 174A (claim not allowed in some cases where the disadvantaged person is within the charge to income tax), ”.

3

After that section insert—

174AClaims under section 174 where disadvantaged person within charge to income tax

A claim under section 174 may not be made if—

a

the disadvantaged person is a person (other than a company) within the charge to income tax in respect of profits arising from the relevant activities, and

b

the advantaged person is a company.

4

After section 187 insert—

Treatment of interest where claim prevented by section 174A

187AExcess interest treated as a qualifying distribution

1

Subsection (2) applies if Conditions A to C in section 187 are met in circumstances where section 174A prevents a claim under section 174.

2

The interest paid under the actual provision, so far as it exceeds ALINT, is treated for the purposes of the Income Tax Acts as a dividend paid by the company which paid the interest (and, accordingly, as a qualifying distribution).

5

The amendments made by this section have effect in relation to any amount arising on or after 25 October 2013, except pre-commencement interest.

6

Pre-commencement interest” means an amount of interest to the extent that it is, in accordance with generally accepted accounting practice, referable to a period before 25 October 2013.