On-line
tool: Step 2 - Indirect transactions
Another point to watch is that indirect transactions can also be
caught. Indeed, there need not be any transaction between the two
related parties.
The legislation has been worded so that a series of transactions may
have to be taken
together and treated as a single composite
transaction, even if there is no direct transaction between the two
related parties.
An example might be if Company A pays over the
odds to an independent supplier in return for the supplier making a
supply to A’s subsidiary, B, on terms more preferential than B would
have received on a stand-alone basis. Even though the legal
transactions are with the supplier, not between A and B, the
transactions together form a series of transactions that bring about a
benefit to B, so the transfer pricing rules might require that A’s
profits be increased by the amount by which it overpaid the supplier.
The 'small print'
The
comments on this page and elsewhere on this website are of a
general nature. It is not practicable in a general review such as
this
to consider every convolution of the UK transfer pricing rules or of
any other tax law that may be relevant. Moreover, these pages
naturally do not take into account the specific facts relating to any
particular taxpayer. Therefore, although the guidance in this
website
should give a good indication of the likely position under the transfer
pricing rules, taxpayers should obtain professional advice to verify
the position, or carry out their own analysis.
Neither
TPS nor its affiliates
and employees
make any representation regarding the
completeness or accuracy thereof and they accept no responsibility for
any loss or damage incurred as a result of any user acting or
refraining from acting upon anything contained on these pages or upon
its omission therefrom.
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