The U.K.’s HM Revenue and Customs, on July 24, released a revised guidance note under S1305A CTA 2009, concerning transactions between related companies that are designed to disguise profit distributions to secure a tax advantage. In such cases, the transaction is treated as if it did not occur, so, for example, any deduction claimed for a disguised transfer of profits would be disallowed.
The guidance adds more details and examples to a March 19 guidance note on the same topic. Included is an expanded discussion of a “profit transfer” within the meaning of the legislation, and new examples covering the application of the legislation to companies that use the profit split transfer pricing method, to transfers of assets with associated income streams between group members, and to the cessation of taxable payments from a parent company to its subsidiary. Guidance Note
