Finance (No. 2) Act 2023

Part 2 U.K. Amendments relating to income tax

Records to be kept for the purposes of income tax U.K.

3 (1) In Part 2 of TMA 1970 (records), section 12B (records to be kept for purposes of returns) is amended as follows.

(2) After subsection (5B) insert—

“(5BA) Regulations under this section may make provision, in relation to relevant transfer pricing records specified, or of a description specified, in the regulations—

(a) as to the form or manner in which those records are to be kept and preserved;

(b) by reference to things specified in the transfer pricing guidelines (within the meaning of section 164 of TIOPA 2010 (interpretation in accordance with OECD principles)).”

(3) In subsection (6)—

(a) omit the “and” after paragraph (a);

(b) after that paragraph insert—

“(aa) records are “relevant transfer pricing records” if the Commissioners for His Majesty’s Revenue and Customs reasonably consider that the records may relate to the calculation of profits or losses in accordance with Part 4 of TIOPA 2010 (transfer pricing);”.

Assessments relating to income tax U.K.

4 In Part 4 of TMA 1970 (assessment and claims), after section 30B insert—

“30C Transfer pricing records: carelessness for the purposes of section 29

(1) This section applies where—

(a) the situation mentioned in section 29(1) has been brought about by a relevant trustee, or a person acting on their behalf, as regards a relevant year of assessment,

(b) the situation relates to the calculation of profits or losses in accordance with Part 4 of TIOPA 2010 (transfer pricing) for the purposes of that year, and

(c) the relevant person has failed to comply, in relation to specified relevant transfer pricing records that relate to the calculation, with either or both of—

(i) section 12B (records to be kept for the purposes of returns), and

(ii) an information notice (within the meaning of Schedule 36 to the Finance Act 2008 (information and inspection powers)).

(2) It is to be presumed for the purposes of section 29 that the situation mentioned in section 29(1) was brought about carelessly by the relevant trustee, or the person acting on their behalf, unless—

(a) the situation was brought about deliberately by the relevant trustee, or the person acting on their behalf, or

(b) the relevant trustee satisfies HMRC or (on an appeal notified to the tribunal) the tribunal that they, or the person acting on their behalf, took reasonable care to avoid the situation.

(3) For the purposes of this paragraph—

(a) “relevant person” means a person who was required by a notice under section 8A to make and deliver the return in respect of the relevant year of assessment;

(b) “relevant year of assessment” means a year of assessment in respect of which—

(i) the trustees of the trust concerned, together with one or more other enterprises, constitutes an MNE Group within the meaning of the Taxes (Base Erosion and Profit Shifting) (Country-by-Country Reporting) Regulations 2016 (S.I. 2016/237) (see regulation 2(3) of those Regulations), and

(ii) the MNE Group meets the threshold requirement within the meaning of those Regulations (see regulations 3(2) to (4) of those Regulations);

(c) records are “specified relevant transfer pricing records” if—

(i) they are relevant transfer pricing records specified, or of a description specified, in regulations under section 12B, and

(ii) the relevant person is required to keep and preserve those records under that section.

30D Transfer pricing records: carelessness for the purposes of section 30B

(1) This section applies where—

(a) the situation mentioned in section 30B(1) has been brought about by a person within section 30B(5) (“P”) as regards a partnership statement in respect of a relevant period,

(b) the situation relates to the calculation of profits or losses in accordance with Part 4 of TIOPA 2010 (transfer pricing) for the purposes of that period, and

(c) the relevant person (whether or not P) has failed to comply, in relation to specified relevant transfer pricing records that relate to the calculation, with either or both of—

(i) section 12B (records to be kept for the purposes of returns), and

(ii) an information notice (within the meaning of Schedule 36 to the Finance Act 2008 (information and inspection powers)).

(2) It is to be presumed for the purposes of section 30B that the situation mentioned in section 30B(1) was brought about carelessly by P, unless—

(a) the situation was brought about deliberately by P, or

(b) the relevant person satisfies HMRC or (on an appeal notified to the tribunal) the tribunal that P took reasonable care to avoid the situation.

(3) For the purposes of this paragraph—

(a) “relevant period” means a period in respect of which—

(i) the partnership to which the partnership statement relates, together with one or more other enterprises, constitutes an MNE Group within the meaning of the Taxes (Base Erosion and Profit Shifting) (Country-by-Country Reporting) Regulations 2016 (S.I. 2016/237) (see regulation 2(3) of those Regulations), and

(ii) the MNE Group meets the threshold requirement within the meaning of those Regulations (see regulations 3(2) to (4) of those Regulations);

(b) “relevant person” means a person who was required by a notice under section 12AA to make and deliver the return in respect of the relevant period;

(c) records are “specified relevant transfer pricing records” if—

(i) they are relevant transfer pricing records specified, or of a description specified, in regulations under section 12B, and

(ii) the relevant person is required to keep and preserve those records under that section.”