Legislation – Finance Act 2026

“Part 4AAssessment of unassessed transfer pricing profits

Chapter 1Unassessed transfer pricing profits

217AIntroduction

(1)

Where a company within the charge to corporation tax has unassessed transfer pricing profits for an accounting period, HMRC may assess those profits to corporation tax in accordance with this Part.

(2)

Where the conditions in section 217C(1) are met, corporation tax is charged at the UTPP rate on unassessed transfer pricing profits assessed under this Part (instead of at the main rate or any other rate).

(3)

The UTPP rate in relation to profits for an accounting period assessed under this Part means the sum of—

(a)

the underlying corporation tax rate, and

(b)

6%.

(4)

In subsection (3) “the underlying corporation tax rate”, in relation to an amount of unassessed transfer pricing profits for an accounting period, means the sum of—

(a)

the rate at which corporation tax would be chargeable on those profits if the amount of those profits were added to the amount of the company’s profits for the accounting period (which may be nil) on which corporation tax would otherwise be chargeable, and

(b)

the percentage given by dividing the total of any amounts that would, ignoring this Part, be assessable or chargeable on the unassessed transfer pricing profits as if they were corporation tax (reduced by any reliefs that would be specific to those amounts) by the amount of the unassessed transfer pricing profits.

(5)

Section 217B sets out when a company has unassessed transfer pricing profits and what the amount of those profits are.

(6)

Chapter 2 sets out the conditions for a company to be assessed at the UTPP rate under this Part.

(7)

Chapter 3 sets out the process to be followed in making an assessment (including provision for a company to be assessed not at the UTPP rate).

(8)

Chapter 4 contains minor definitions.

(9)

In Schedule A1—

(a)

Part 1 sets out when a company has unassessed transfer pricing profits as a partner of a partnership,

(b)

Parts 2 and 3 set out how Chapters 2 and 3 of this Part apply in that case, and

(c)

Part 4 sets out how Parts 1 to 3 of the Schedule apply to a company as a corporate member of a Lloyd’s syndicate.

217BUnassessed transfer pricing profits

(1)

For the purposes of this Part, a company has unassessed transfer pricing profits for an accounting period if—

(a)

the company has made a self-assessment for the period,

(b)

provision has been made or imposed as between the company and another person (referred to in this Part as “the other party”) by means of a transaction or series of transactions,

(c)

the profits of the company for the period are subject to a transfer pricing requirement in relation to that provision, and

(d)

the transfer pricing requirement was not reflected, or is not wholly reflected, in the company’s self-assessment.

(2)

The unassessed transfer pricing profits of the company for the accounting period are—

(a)

to the extent that the transfer pricing requirement requires profits that are not reflected in the company’s self-assessment to be brought into account, those profits, and

(b)

to the extent that the transfer pricing requirement requires losses that are reflected in the company’s self-assessment to not be brought into account, the profits that would, if they were brought into account, produce the same result as not bringing into account those losses.

(3)

For the purposes of subsection (2), the references to profits or losses being brought into account are to profits or losses being brought into account in calculating the company’s profit or loss for the period for corporation tax purposes.

(4)

The profits of a company are subject to a transfer pricing requirement in relation to the provision if—

(a)

the company’s profits and losses are required to be calculated as if the arm’s length provision (within the meaning of Part 4) had been made or imposed instead of the provision, or

(b)

an adjustment to the company’s profits and losses that result from the provision is required by virtue of any other enactment where, but for that enactment, paragraph (a) would have applied in relation to the provision.

(5)

In this Part “self-assessment” means a self-assessment under paragraph 7 of Schedule 18 to FA 1998 (and where that assessment has been amended, reference to the self-assessment is to that assessment as amended).

(6)

This section does not apply to a company in its capacity as a corporate partner of a partnership or a corporate member of a Lloyd’s syndicate (as to which see Schedule A1) (but this does not prevent this section from otherwise applying in circumstances where a company holds an interest in another person whose profits are treated for the purposes of corporation tax as profits of the company).

Chapter 2Conditions for being assessed

217CConditions for being assessed under this Part at the UTPP rate

(1)

Unassessed transfer pricing profits of a company may be assessed under this Part at the UTPP rate only to the extent that—

(a)

the provision to which the profits relate has an effective tax mismatch outcome for the accounting period to which the profits relate,

(b)

the tax design condition is met, and

(c)

the unassessed transfer pricing profits do not arise wholly from excepted loan relationship arrangements.

(2)

In this section “excepted loan relationship arrangements” means—

(a)

any arrangements that would produce debits or credits under Part 5 of CTA 2009 (loan relationships and deemed loan relationships) (“a loan relationship”), or

(b)

a loan relationship and a relevant contract (within the meaning of Part 7 of that Act (derivative contracts)) taken together, where the relevant contract is entered into entirely as a hedge of risk in connection with the loan relationship.

217DEffective tax mismatch outcome

(1)

Provision between the company and the other party has an effective tax mismatch outcome for an accounting period if the corresponding amount is less than 80% of the underlying corporation tax amount.

(2)

“The underlying corporation tax amount” is the amount determined by multiplying the amount of the unassessed transfer pricing profits by the underlying corporation tax rate (within the meaning of section 217A(4)).

(3)

“The corresponding amount” means the amount (which may be nil) of relevant tax—

(a)

that is due and payable by the other party and that—

(i)

where it has been paid, has not been refunded and would not be refunded if all reasonable steps were taken to secure that it was refunded;

(ii)

otherwise, would remain due and payable if all reasonable steps were taken to minimise the amount, and

(b)

charged (in any period) on profits that correspond to the unassessed transfer pricing profits.

(4)

The steps mentioned in subsection (3)(a) include—

(a)

claiming, or otherwise securing the benefit of, reliefs, deductions, reductions or allowances, and

(b)

making elections for the purposes of the relevant tax.

(5)

For the purposes of subsection (3)—

(a)

an amount of relevant tax is refunded if and to the extent that—

(i)

any repayment of tax, or any payment in respect of a credit for tax, is made to any person, and

(ii)

that repayment or payment is directly or indirectly in respect of the whole or part of the amount of relevant tax paid by the other party;

(b)

any withholding tax which is due and payable on payments made to the other party is (unless it is refunded within the meaning of paragraph (a)) to be treated as tax which is due and payable by the other party (and not the person making the payment).

(6)

Where the other party is a transparent entity, the provision is to be treated as having an effective tax mismatch outcome for an accounting period unless HMRC is satisfied that it does not have such an outcome for the accounting period.

(7)

For the purposes of this section, the other party is a “transparent entity” if, for the purposes of relevant tax charged under the law of the territory in which the other party is legally constituted, profits that correspond to the unassessed transfer pricing profits are treated as the income or profits of a person or persons other than the other party.

(8)

Where the other party is a transparent entity—

(a)

references in this section to relevant tax that is due and payable or paid by the other party include a reference to relevant tax that is due and payable or paid by any person as a result of profits which correspond to the unassessed transfer pricing profits being treated for the purposes of relevant tax charged under the law of any territory as the income or profits of that person;

(b)

subsection (5)(b) applies to any such persons as it applies to the other party.

(9)

In this section “relevant tax” means—

(a)

income tax,

(b)

corporation tax on income,

(c)

any amount chargeable as if it were corporation tax or treated as if it were corporation tax (other than the CFC charge within the meaning of Part 9A of this Act), or

(d)

any foreign tax.

217ETax design condition

(1)

The tax design condition is met if it is reasonable to assume that the structure of—

(a)

the transaction or series of transactions by which the provision to which the unassessed transfer pricing profits relate is imposed, or

(b)

any arrangements to which the transaction or series of transactions relate,

is designed to have the effect of reducing, eliminating or delaying the liability of any person to pay UK tax.

(2)

In subsection (1)—

(a)

“arrangements” means any scheme or arrangement of any kind (whether or not it is, or is intended to be, legally enforceable);

(b)

“UK tax” means income tax, corporation tax or capital gains tax.

Chapter 3Assessment

217FPreliminary notices

(1)

A designated officer may issue a preliminary notice to a company if they consider that the company has unassessed transfer pricing profits by virtue of section 217B.

(2)

A preliminary notice issued under this section must —

(a)

state the accounting period to which the unassessed transfer pricing profits relate;

(b)

set out the officer’s best judgement of the amount of unassessed transfer pricing profits;

(c)

set out the basis on which the officer considers that the conditions mentioned in section 217C(1) are met.

(3)

A preliminary notice under this section may not be issued in respect of an accounting period more than 4 years after the end of that period.

217GRepresentations by the company

(1)

Where a preliminary notice is issued to a company, the company may make representations to a designated officer in accordance with this section

(2)

Representations are only made in accordance with this section if—

(a)

they are made in writing,

(b)

they are made within the period of 30 days beginning with the day on which the officer issued the preliminary notice, and

(c)

they are made solely on the grounds specified in subsection (3).

(3)

Those grounds are—

(a)

that there is an arithmetical error in the calculation of any profits stated in the preliminary notice or an error in a figure on which an assumption in the notice is based;

(b)

that one or both of the conditions in section 217C(1)(a) and (c) are not met.

(4)

But where the preliminary notice sets out that the basis on which the officer considers the condition mentioned in section 217C(1)(a) is met is because the other party is a transparent entity, representations are also made in accordance with this section if they are—

(a)

made within the period of 60 days beginning with the day on which the officer issued the preliminary notice, and

(b)

made solely on the grounds that the condition in section 217C(1)(a) is not met.

217HAssessment

(1)

This section applies where—

(a)

a designated officer has issued a preliminary notice to a company under section 217F in relation to the company’s unassessed transfer pricing profits for an accounting period, and

(b)

a designated officer has considered any representations made by the company in accordance with section 217G.

(2)

A designated officer may assess the company to corporation tax at the UTPP rate on the unassessed transfer pricing profits that the company has for the period by virtue of section 217B.

(3)

But where an officer of HMRC is required by a direction under paragraph 33 of Schedule 18 to FA 1998 to give a relevant closure notice, an assessment under this section may not be made before the relevant closure notice is given.

(4)

An assessment under this section must be made before—

(a)

the end of the period of—

(i)

in a case where the preliminary notice to which the assessment relates sets out that the basis on which the officer considers the condition mentioned in section 217C(1)(a) is met is because the other party is a transparent entity, 90 days beginning with the day on which the preliminary notice was issued, or

(ii)

otherwise, 60 days beginning with the day on which the preliminary notice to which the assessment relates was issued,

(but nothing in this subsection prevents a further preliminary notice being issued), or

(b)

if later, in a case where a relevant closure notice required to be given by a direction under paragraph 33 of Schedule 18 to FA 1998 has been given before the end of the period mentioned in paragraph (a), the end of the period of 30 days beginning with the day on which the closure notice was given.

(5)

In this section a “relevant closure notice” means a partial or final closure notice in relation to an enquiry into the company tax return for the accounting period mentioned in subsection (1)(a).

217IAmendment of company tax return by company

(1)

This section applies where a designated officer assesses a company’s unassessed transfer pricing profits for an accounting period under section 217H.

(2)

At any time before the end of the period for amendments, the company may amend its company tax return for the accounting period so that its self-assessment more fully reflects the transfer pricing requirement to which the unassessed transfer pricing profits relate.

(3)

In this Chapter “the period for amendments” means the period of 15 months beginning with the day after the day on which the designated officer assesses the company’s unassessed transfer pricing profits under section 217H.

(4)

If, before the end of the period of 15 months referred to in subsection (3), a designated officer and the company agree (in writing) that the period for amendments is to terminate, the period ends when that agreement is made.

(5)

An amendment under subsection (2) may not be made in the last 21 days of the period for amendments, unless the period for amendments ends by agreement in accordance with subsection (4).

(6)

Paragraph 31(3) of Schedule 18 to FA 1998 (amendment not to take effect during enquiry) does not apply in relation to an amendment made under subsection (2).

217JAmendment of assessment by HMRC

(1)

This section applies where a designated officer assesses a company’s unassessed transfer pricing profits for an accounting period under section 217H.

(2)

If at any time before the end of the period for amendments a designated officer is satisfied that the total corporation tax charged at the UTPP rate on the company’s unassessed transfer pricing profits for the period is excessive, the designated officer must amend or withdraw the assessment accordingly.

(3)

If at any time (whether or not before the end of the period for amendments) a designated officer is satisfied that one or more of the conditions mentioned in section 217C(1) do not apply in respect of unassessed transfer pricing profits so assessed, the designated officer must—

(a)

withdraw the assessment, or

(b)

amend the assessment to assess the unassessed transfer pricing profits to corporation tax not at the UTPP rate.

(4)

Where an assessment is amended under subsection (2) or (3) any tax overpaid must be repaid.

(5)

If a designated officer is satisfied at any time before the end of the period for amendments that the total corporation tax charged at the UTPP rate on the company’s unassessed transfer pricing profits for the period is insufficient, the designated officer may amend the assessment accordingly.

(6)

An amendment under subsection (5) may not be made in the last 30 days of the period for amendments, unless the period for amendments ends by agreement in accordance with section 217I(4).

217KNo postponement except before assessment is finalised for tax on same profits

(1)

This section applies where—

(a)

a designated officer has assessed a company’s unassessed transfer pricing profits for an accounting period under section 217H or section 217J(5), and

(b)

the amount of paid relevant tax is greater than nil.

(2)

The company may—

(a)

first apply by notice in writing to HMRC for a determination of the amount of the corporation tax charged on the unassessed transfer pricing profits the payment of which is to be postponed until the assessment is finalised (see subsection (3));

(b)

where such a determination is not agreed, refer the application for a determination to the tribunal within the period of 30 days beginning with the date of the document notifying the company of HMRC’s determination.

(3)

For the purposes of this section—

(a)

the amount of corporation tax charged on the unassessed transfer pricing profits the payment of which is to be postponed until the assessment is finalised is an amount equal to the amount of paid relevant tax, and

(b)

the assessment is finalised when—

(i)

the period of 30 days mentioned in section 217M(2) ends without notice of an appeal to the tribunal against the assessment being given,

(ii)

an appeal against the assessment is finally determined otherwise than by the assessment being cancelled, or

(iii)

an appeal against the assessment is withdrawn.

(4)

An application under subsection (2)(a)—

(a)

must be made within the period of 30 days beginning with the day after—

(i)

the day on which the unassessed transfer pricing profits are assessed under section 217H or section 217J(5), or

(ii)

if later, any day on which the amount of paid relevant tax ceases to be nil, and

(b)

must state the amount of paid relevant tax and include documentary evidence of that amount.

(5)

If, after any determination of the amount of corporation tax the payment of which should be so postponed—

(a)

the company or HMRC has grounds for believing that the amount so determined has become excessive or insufficient, and

(b)

the parties cannot agree on a revised determination,

the party mentioned in paragraph (a) may, at any time before the assessment is finalised, apply to the tribunal for a revised determination of that amount.

(6)

Any application to the tribunal under subsection (2)(b) or subsection (5) is subject to the relevant provisions of Part 5 of TMA 1970 (see, in particular, section 48(2)(b) of that Act).

(7)

If the company and HMRC reach an agreement as to the amount of corporation tax the payment of which should be postponed until the assessment is finalised, the agreement shall not have effect unless—

(a)

the agreement is in writing, or

(b)

the fact that the agreement has been reached, and the terms of the agreement, are confirmed by notice in writing given—

(i)

by the company to HMRC, or

(ii)

by HMRC to the company.

(8)

The payment of corporation tax charged on the unassessed transfer pricing profits—

(a)

may not be postponed other than in accordance with this section, and

(b)

accordingly, any amount of the corporation tax that is not postponed in accordance with this section or ceases to be postponed in accordance with this section is due and payable in accordance with section 59D of TMA 1970 or regulations made under section 59E of that Act.

(9)

In this section—

(a)

“appeal” means any appeal under the Taxes Acts;

(b)

“paid relevant tax” means relevant tax within the meaning of section 217D(9)—

(i)

charged (in any period) on profits that correspond to the unassessed transfer pricing profits, and

(ii)

that has been paid by the other party and not refunded within the meaning of section 217D(5);

(c)

“tribunal” means the First-tier Tribunal or, where determined by or under Tribunal Procedure Rules, the Upper Tribunal;

(d)

references to agreements between a company and HMRC, and to the giving of notices between the parties, include references to agreements, and the giving of notices, between a person acting on behalf of the company and HMRC.

(10)

For the purposes of subsection (9)(b)—

(a)

any withholding tax which has been paid on payments made to the other party is (unless it is refunded within the meaning of section 217D(5)) to be treated as tax which has been paid by the other party (and not by the person making the payment);

(b)

where the other party is a transparent entity within the meaning of section 217D(7)—

(i)

the reference to relevant tax that has been paid by the other party includes a reference to relevant tax that has been paid by any person as a result of profits that correspond to the unassessed transfer pricing profits being treated for the purposes of relevant tax charged under the law of any territory as the income or profits of that person;

(ii)

paragraph (a) applies to any such persons as it applies to the other party.

217LClosure notices: rules relating to period for amendments

(1)

This section applies where a designated officer assesses a company’s unassessed transfer pricing profits for an accounting period under section 217H.

(2)

A relevant closure notice may not be issued under paragraph 32 of Schedule 18 to FA 1998 at any time before the end of the period for amendments.

(3)

Accordingly, a tribunal direction given under paragraph 33 of Schedule 18 to FA 1998 in relation to a relevant closure notice has no effect until the period for amendments has ended.

(4)

A relevant closure notice issued after the end of the period for amendments may not make any amendments to the company tax return which have the effect that its self-assessment more fully reflects the transfer pricing requirement to which the unassessed transfer pricing profits relate.

(5)

In this section a “relevant closure notice” means a partial or final closure notice in relation to an enquiry into the company tax return for the accounting period mentioned in subsection (1).

217MAppeal against assessment

(1)

A company may only appeal against an assessment of its unassessed transfer pricing profits under section 217H or section 217J(5) where—

(a)

the company has paid (in full) the corporation tax charged on the profits assessed other than any amount the payment of which has been postponed in accordance with section 217K, and

(b)

the period for amendments has ended.

(2)

Notice of an appeal must be given before the end of the period of 30 days beginning with—

(a)

the end of the period for amendments, or

(b)

in a case where section 217I(4) applies, the day after the day on which the period for amendments ends,

(and accordingly paragraph 48(2)(b) of Schedule 18 to FA 1998 does not apply).

(3)

Subsection (4) applies where, on an appeal against an assessment of a company’s unassessed transfer pricing profits, the tribunal decides that the company is overcharged by the assessment as a result of one or more of the conditions mentioned in section 217C(1) not applying in respect of unassessed transfer pricing profits so assessed.

(4)

The tribunal may, in addition to any other powers exercisable by the tribunal in those circumstances, reduce the tax charged on the amount assessed to assess the unassessed transfer pricing profits to corporation tax not at the UTPP rate.

217NReview of assessment

(1)

This section applies if—

(a)

HMRC are required by section 49B or 49C of TMA 1970 to review the assessment of a company’s unassessed transfer pricing profits, and

(b)

the review finds that one or more of the conditions mentioned in section 217C(1) do not apply in respect of unassessed transfer pricing profits so assessed.

(2)

The reference in section 49E(5) of TMA 1970 (nature of review etc) to the review concluding that HMRC’s view of the matter in question is to be varied is to be read as including a reference to the review concluding that the assessment is to be amended to assess the unassessed transfer pricing profits to corporation tax not at the UTPP rate.

217PSettling of appeal by agreement

Where a company gives notice of appeal against an assessment of its unassessed transfer pricing profits, references in section 54 of TMA 1970 to the assessment being varied are to be read as including a reference to the assessment being amended to assess the unassessed transfer pricing profits to corporation tax not at the UTPP rate.

217QNo repayment

No claim may be made under section 59DA of TMA 1970 (repayment in advance of liability being established) or regulations under section 59E of that Act for the repayment of any amount of corporation tax charged on unassessed transfer pricing profits assessed under this Part at the UTPP rate.

217RExclusion of reliefs, deductions and set-offs

No relief, deduction or set-off of any description is allowed against—

(a)

a company’s unassessed transfer pricing profits assessed under this Part at the UTPP rate, or

(b)

corporation tax charged at the UTPP rate on unassessed transfer pricing profits assessed under this Part.

217SAssessment otherwise than at UTPP rate: no deduction for excess losses

(1)

Where an assessment under this Part is amended to assess the unassessed transfer pricing profits to corporation tax otherwise than at the UTPP rate, no deduction from the unassessed transfer pricing profits is allowed for excess losses.

(2)

“Excess losses” means any losses—

(a)

that are reflected in the company’s self assessment, and

(b)

that the transfer pricing requirement to which the unassessed transfer pricing profits relate requires to not be brought into account in calculating the company’s profits or loss for the period for corporation tax purposes.

Chapter 4Interpretation

Interpretation

217TInterpretation

(1)

In this Part—

“designated officer” means an officer of Revenue and Customs who has been designated by the Commissioners for His Majesty’s Revenue and Customs for the purposes of this Part;

“foreign tax” means a tax falling within subsection (2) of section 259B (see also subsections (3) and (3ZA) of that section);

“HMRC” means His Majesty’s Revenue and Customs.

(2)

References in this Part to a power to assess include any power to otherwise determine amounts of tax that are chargeable or payable by a company (and references to assessment and any other cognate expressions are to be construed accordingly).”

“Schedule A1Assessment of unassessed transfer pricing profits: partnerships and Lloyd’s syndicates

section 217A

Part 1Corporate partner’s unassessed transfer pricing profits

Unassessed transfer pricing profits: corporate partners

1

(1)

For the purposes of this Part of this Act, a company has unassessed transfer pricing profits as a corporate partner of a partnership in relation to a return period if—

(a)

the company is or has been a partner in the partnership;

(b)

a partnership return in respect of the partnership has been made and delivered in respect of the return period,

(c)

provision has been made or imposed as between the partnership and another person by means of a transaction or series of transactions,

(d)

the partnership’s profits and losses calculated under section 1259 of CTA 2009 for one or more relevant accounting periods are subject to a transfer pricing requirement in relation to that provision,

(e)

a share of the partnership’s profit or loss calculated under section 1259 of CTA 2009 for one or more of those relevant accounting periods is brought into account in calculating the company’s profit or loss for one or more accounting periods for corporation tax purposes, and

(f)

the transfer pricing requirement was not reflected, or is not wholly reflected, in the partnership’s profits and losses that were—

(i)

included in the partnership return, and

(ii)

calculated under section 1259 of CTA 2009.

(2)

For the purposes of this Part of this Act, the unassessed transfer pricing profits of the company for an accounting period are the profits that would be brought into account in calculating the company’s profit or loss for that accounting period for corporation tax purposes, if the amount of the partnership’s profit calculated under section 1259 of CTA 2009 for each of the relevant accounting periods mentioned in sub-paragraph (1)(e) was taken to be the amount of the partnership’s unassessed transfer pricing profits for that relevant accounting period (and no other amount).

(3)

For the purposes of sub-paragraph (2), the partnership’s unassessed transfer pricing profits for a relevant accounting period are—

(a)

to the extent that the transfer pricing requirement requires profits that are not reflected in the partnership return to be brought into account in calculating the partnership’s profits or losses calculated under section 1259 of CTA 2009 for the relevant accounting period, those profits, and

(b)

to the extent that the transfer pricing requirement requires losses that are reflected in the partnership’s return to not be brought into account in calculating the partnership’s profits or losses calculated under section 1259 of CTA 2009 for the relevant accounting period, the profits that would, if they were brought into account in that calculation, produce the same result as not bringing into account those losses.

(4)

The partnership’s profits and losses calculated under section 1259 of CTA 2009 for a relevant accounting period are subject to a transfer pricing requirement in relation to the provision if—

(a)

the partnership’s profits and losses calculated under section 1259 of CTA 2009 for the relevant accounting period are required to be calculated as if the arm’s length provision (within the meaning of Part 4) had been made or imposed instead of the provision, or

(b)

an adjustment to the partnership’s profits and losses calculated under section 1259 of CTA 2009 for the relevant accounting period that result from the provision is required by virtue of any other enactment where, but for that enactment, paragraph (a) would have applied in relation to the provision.

(5)

In this paragraph—

(a)

for the purposes of sub-paragraph (1)(a), a company that is or has been a partner in the partnership includes a company that is or has been an indirect partner in the partnership for the purposes of section 12AA of TMA 1970, and

(b)

accordingly, the reference in sub-paragraph (2) to the partnership’s profits or losses being brought into account in calculating the profit or loss of a company that is or has been a partner in a partnership includes those profits or losses being brought into account indirectly.

(6)

In Parts 1 to 3 of this Schedule—

(a)

“partnership return” means a return in pursuance of a notice under section 12AA(2) or (3) of TMA 1970 (and where the return has been amended, reference to the return is to that return as amended);

(b)

“relevant corporate partner”, in relation to a partnership and a return period, means a company which has unassessed transfer pricing profits for one or more accounting periods as a corporate partner of the partnership in relation to the return period by virtue of this paragraph (and references to the relevant corporate partner’s unassessed transfer pricing profits are to be construed accordingly);

(c)

“return period” means the period in respect of which a partnership return is required pursuant to the notice under section 12AA(2) or (3) of TMA 1970;

(d)

“relevant accounting period”, in relation to a partnership return, means an accounting period of the firm (within the meaning of Part 17 of CTA 2009) ending within the return period.

Part 2Conditions for being assessed

Conditions for being assessed

2

(1)

In its application to the unassessed transfer pricing profits which a company has for one or more accounting periods as a corporate partner of a partnership in relation to a return period by virtue of paragraph 1, Chapter 2 of this Part of this Act has effect as if—

(a)

references to the other party were to the other person mentioned in paragraph 1(1)(c);

(b)

the reference in section 217D(1) to the company were a reference to the partnership;

(c)

where the partnership has more than one relevant corporate partner in relation to the return period, for section 217D(2) there were substituted—

“(2)

“The underlying corporation tax amount” is the sum of the amounts determined in relation to each relevant corporate partner by multiplying the amount of the relevant corporate partner’s unassessed transfer pricing profits by the underlying corporation tax rate.”;

(d)

the reference in section 217D(3) to relevant tax charged (in any period) on profits that correspond to the unassessed transfer pricing profits were to the relevant corporate partners’ proportion of relevant tax charged (in any period) on profits that correspond to the partnership’s unassessed transfer pricing profits within the meaning of paragraph 1(3) of this Schedule.

(2)

In sub-paragraph (1)(d) “the relevant corporate partners’ proportion” means the proportion that—

(a)

where the partnership has one relevant corporate partner, the relevant corporate partner’s unassessed transfer pricing profits, or

(b)

where the partnership has more than one relevant corporate partner, the sum of each relevant corporate partner’s unassessed transfer pricing profits,

bears to the partnership’s unassessed transfer pricing profits within the meaning of paragraph 1(3) of this Schedule.

Part 3Assessment

Preliminary notices

3

(1)

Where a designated officer considers that a company has unassessed transfer pricing profits for one or more accounting periods as a corporate partner of a partnership in relation to a return period by virtue of paragraph 1, a designated officer may issue a preliminary notice to the representative partner.

(2)

A preliminary notice issued under this paragraph must—

(a)

set out the officer’s best judgement of the amount of the partnership’s unassessed transfer pricing profits (within the meaning of paragraph 1(3));

(b)

state the return period to which the partnership’s unassessed transfer pricing profits relate;

(c)

set out the officer’s best judgement of the amount of the unassessed transfer pricing profits of all of the relevant corporate partners;

(d)

state the accounting periods to which the unassessed transfer pricing profits of all of the relevant corporate partners relate;

(e)

set out the basis on which the officer considers that the conditions mentioned in section 217C(1) are met.

(3)

A preliminary notice under this paragraph may not be issued in respect of a return period more than 4 years after the end of that period.

(4)

In this Part of this Schedule, the “representative partner” means the partner who made and delivered the partnership return to which the unassessed transfer pricing profits relate or that partner’s successor within the meaning of TMA 1970 (see section 12AA(11) and (12) of that Act).

Representations by the partnership

4

Section 217G has effect in relation to a preliminary notice issued to the representative partner under paragraph 3 as it has effect in relation to a preliminary notice issued to a company but as if the reference in subsection (4) of that section to the other party were to the other person mentioned in paragraph 1(1)(c).

Assessment

5

(1)

This paragraph applies where—

(a)

a designated officer has issued a preliminary notice to the representative partner under paragraph 3 in relation to a return period of the partnership, and

(b)

a designated officer has considered any representations made by the representative partner in accordance with section 217G (as applied by paragraph 4).

(2)

A designated officer may assess the unassessed transfer pricing profits of all of the relevant corporate partners of the partnership in relation to the return period to corporation tax at the UTPP rate.

(3)

For the purposes of sub-paragraph (2), a designated officer assesses the unassessed transfer pricing profits of all of the relevant corporate partners of the partnership by—

(a)

where the partnership has one relevant corporate partner in relation to the return period, assessing the relevant corporate partner on the relevant corporate partner’s unassessed transfer pricing profits for the accounting period or periods stated in the preliminary notice;

(b)

where the partnership has more than one relevant corporate partner in relation to the return period, assessing each relevant corporate partner on the relevant corporate partner’s unassessed transfer pricing for the accounting periods stated in the preliminary notice, on the same day.

(4)

Notices of any assessments under this paragraph issued to a relevant corporate partner must also be issued to the representative partner.

(5)

Subsections (3) to (5) of section 217H have effect in relation to an assessment under this paragraph as they have effect in relation to an assessment under section 217H but as if—

(a)

the reference in subsection (4) to the other party were to the other person mentioned in paragraph 1(1)(c),

(b)

references to paragraph 33 of Schedule 18 to FA 1998 were to section 28B of TMA 1970, and

(c)

the reference in subsection (5) to the company tax return for the accounting period mentioned in subsection (1)(a) were to the partnership return for the return period mentioned in sub-paragraph (1)(a).

Amendment of partnership return by partnership

6

(1)

This paragraph applies where a designated officer assesses the unassessed transfer pricing profits of all of the relevant corporate partners of a partnership in relation to a return period under paragraph 5.

(2)

At any time before the end of the period for amendments, the representative partner may amend the partnership return for the return period so that the calculation of the partnership’s profits and losses under section 1259 of CTA 2009 more fully reflects the transfer pricing requirement to which the unassessed transfer pricing profits relate.

(3)

In this Part of this Schedule “the period for amendments” means the period of 15 months beginning with the day after the day on which the designated officer assesses the unassessed transfer pricing profits of all of the relevant corporate partners under paragraph 5.

(4)

If, before the end of the period of 15 months referred to in sub-paragraph (3), a designated officer and the representative partner agree (in writing) that the period for amendments is to terminate, the period ends when that agreement is made.

(5)

An amendment under sub-paragraph (2) may not be made in the last 21 days of the period for amendments, unless the period for amendments ends by agreement in accordance with sub-paragraph (4).

(6)

Section 12AD(3) of TMA 1970 (amendment not to take effect during enquiry) does not apply in relation to an amendment made under sub-paragraph (2).

Amendment of assessment by HMRC

7

(1)

This paragraph applies where a designated officer assesses the unassessed transfer pricing profits of all of the relevant corporate partners of a partnership in relation to a return period under paragraph 5.

(2)

If at any time before the end of the period for amendments a designated officer is satisfied that the total corporation tax charged on any relevant corporate partner’s unassessed transfer pricing profits for an accounting period by an assessment under paragraph 5 is excessive, the designated officer must amend or withdraw the assessment accordingly.

(3)

If at any time (whether or not before the end of the period for amendments) a designated officer is satisfied that one or more of the conditions mentioned in section 217C(1) do not apply in respect of unassessed transfer pricing profits so assessed, the designated officer must—

(a)

withdraw all of the assessments made under paragraph 5, or

(b)

amend all of the assessments to assess the unassessed transfer pricing profits to corporation tax not at the UTPP rate.

(4)

Where an assessment is amended under sub-paragraph (2) or (3) any tax overpaid must be repaid.

(5)

If a designated officer is satisfied at any time before the end of the period for amendments that the total corporation tax charged on any relevant corporate partner’s unassessed transfer pricing profits for the period is insufficient, the designated officer may amend the assessment accordingly.

(6)

An amendment under sub-paragraph (5) may not be made in the last 30 days of the period for amendments, unless the period for amendments ends by agreement in accordance with paragraph 6(4).

(7)

Where an assessment is withdrawn or amended under this paragraph, notice of the withdrawal or amendment must be given to the representative partner.

No postponement except before assessment is finalised for tax on same profits

8

(1)

Section 217K applies where a designated officer has assessed the unassessed transfer pricing profits of all of the relevant corporate partners of a partnership in relation to a return period under paragraph 5 or paragraph 7(5) as it applies where a designated officer has assessed a company’s unassessed transfer pricing profits under section 217H or section 217J(5) but as if—

(a)

references to the company were to the representative partner;

(b)

where the partnership has more than one relevant corporate partner in relation to the return period—

(i)

in subsection (2)(a) after “determination” there were inserted “in relation to each assessment”;

(ii)

references to the assessment being finalised were to all of the assessments being finalised;

(iii)

the reference in subsection (3)(b)(i) to the assessment were to the assessments;

(iv)

the references in subsection (3)(b)(ii) and (iii) to an appeal against the assessment were to all appeals against the assessments;

(c)

references to the other party were to the other person mentioned in paragraph 1(1)(c);

(d)

the reference in subsection (3)(b) to section 217M(2) were to paragraph 10(3);

(e)

the reference in subsection (9)(b)to relevant tax charged (in any period) on profits that correspond to the unassessed transfer pricing profits were to the relevant corporate partner’s share of relevant tax charged (in any period) on profits that correspond to the partnership’s unassessed transfer pricing profits within the meaning of paragraph 1(3).

(2)

In sub-paragraph (1)(e) “the relevant corporate partner’s share” means the share of the partnership’s profits or losses calculated under section 1259 of CTA 2009 for all of the relevant accounting periods mentioned in paragraph 1(1)(e) that is brought into account in calculating the relevant corporate partner’s profit or loss for any accounting period for corporation tax purposes.

Closure notices: rules relating to period for amendments

9

(1)

This paragraph applies where a designated officer assesses the unassessed transfer pricing profits of all of the relevant corporate partners of a partnership in relation to a return period under paragraph 5.

(2)

A relevant closure notice may not be issued under section 28B of TMA 1970 at any time before the end of the period for amendments.

(3)

Accordingly, a tribunal direction given under section 28B of TMA 1970 in relation to a relevant closure notice has no effect until the period for amendments has ended.

(4)

A relevant closure notice issued after the end of the period for amendments may not make any amendments to the partnership return which have the effect that the calculation of the partnership’s profits and losses under section 1259 of CTA 2009 more fully reflects the transfer pricing requirement to which the unassessed transfer pricing profits relate.

(5)

In this paragraph a “relevant closure notice” means a partial or final closure notice in relation to an enquiry into the partnership return for the return period mentioned in sub-paragraph (1).

Appeal against assessment

10

(1)

An appeal against the assessment of the unassessed transfer pricing profits of a relevant corporate partner of a partnership in relation to a return period under this Schedule may only be made—

(a)

by the representative partner, and

(b)

where the partnership has more than one relevant corporate partner in relation to the return period, by the representative partner appealing at the same time against the assessments of the unassessed transfer pricing profits of all of the relevant corporate partners.

(2)

The representative partner in the partnership may only bring an appeal against such an assessment where—

(a)

all of the relevant corporate partners have paid (in full) the corporation tax charged on the profits assessed other than any amount the payment of which has been postponed in accordance with paragraph 8, and

(b)

the period for amendments has ended.

(3)

Notice of an appeal must be given before the end of the period of 30 days beginning with—

(a)

the end of the period for amendments, or

(b)

in a case where paragraph 6(4) applies, the day after the day on which the period for amendments ends,

(and accordingly paragraph 48(2)(b) of Schedule 18 to FA 1998 does not apply).

(4)

Sub-paragraphs (5) and (6) apply where, on an appeal against an assessment of a relevant corporate partner’s unassessed transfer pricing profits, the tribunal decides that the company is overcharged by the assessment as a result of one or more of the conditions mentioned in section 217C(1) not applying in respect of unassessed transfer pricing profits so assessed.

(5)

The tribunal may, in addition to any other powers exercisable by the tribunal in those circumstances, reduce the tax charged on the amount assessed to assess the unassessed transfer pricing profits to corporation tax not at the UTPP rate.

(6)

But where the partnership has more than one relevant corporate partner in relation to the return period the tribunal may only exercise the power in sub-paragraph (5) if the tribunal exercises the power on the appeal against the assessment of the unassessed transfer pricing profits of each relevant corporate partner.

Review of assessment

11

In its application in relation to an appeal against the assessment of the unassessed transfer pricing profits of a relevant corporate partner of a partnership in relation to a return period in respect of which the partnership has more than one relevant corporate partner, section 217N has effect as if after subsection (2) there were inserted—

“(3)

But the review may only conclude that the assessment is to be amended as described in subsection (2) if the review concludes that the assessment of each of the relevant corporate partner’s unassessed transfer pricing profits is to be amended in that way.”

Settling of appeal by agreement

12

(1)

Where the representative partner gives notice of appeal against an assessment of the unassessed transfer pricing profits of a relevant corporate partner of a partnership in relation to a return period, references in section 54 of TMA 1970 to an agreement that the assessment should be varied are to be read as including a reference to an agreement that the assessment should be amended to assess the unassessed transfer pricing profits to corporation tax not at the UTPP rate.

(2)

But where the partnership has more than one relevant corporate partner in relation to the return period, an agreement that the assessment should be amended as described in sub-paragraph (1) may only be made if an agreement of that kind is made in relation to the assessment of each of the relevant corporate partner’s unassessed transfer pricing profits.

Part 4Application to Lloyd’s syndicates

Introduction

13

(1)

Parts 1 to 3 of this Schedule apply to a company as a corporate member of a syndicate as they apply to a company as a corporate partner of a partnership as if references to—

(a)

partnership were to syndicate;

(b)

corporate partner or corporate partners were to corporate member or corporate members;

(c)

partnership return were to syndicate return;

(d)

return period were to underwriting year;

(e)

the representative partner were to the syndicate’s managing agent;

(f)

“calculated under section 1259 of CTA 2009” were omitted.

(2)

The application of Parts 1 to 3 of this Schedule to a corporate member of a syndicate is also subject to the modifications set out in paragraph 14.

(3)

For the purposes of this Part of this Schedule—

(a)

“corporate member”, in relation to a syndicate—

(i)

means a body corporate which is a member of Lloyd’s and is or has been an underwriting member, and

(ii)

where the body corporate is a partnership, includes any company that is or has been a partner in that partnership (and for these purposes, partner includes any person who is or has been an indirect partner in the partnership within the meaning of section 12AA of TMA 1970);

(b)

“syndicate” and “underwriting year” have the same meanings as in Chapter 5 of Part 4 of FA 1994 (see section 230 of that Act);

(c)

“managing agent” and “syndicate return” have the same meanings as in regulation 4 of the Lloyd’s Underwriters (Tax) Regulations 2005 (S.I. 2005/3338).

Modifications to Parts 1 to 3 of this Schedule

14

(1)

Paragraph 1 (unassessed transfer pricing profits) has effect as if—

(a)

references to relevant accounting period, one or more relevant accounting periods, one or more of those relevant accounting periods and each of the relevant accounting periods mentioned in sub-paragraph (1)(e) were to the underwriting year;

(b)

the references in sub-paragraph (1)(a) and (5)(b) to partner were to corporate member;

(c)

in sub-paragraph (2) after “brought into account”, in the first place it occurs, there were inserted “during the period for amendments (see paragraph 6)”;

(d)

sub-paragraph (5)(a) (and the “accordingly” at the start of sub-paragraph (5)(b)) and sub-paragraphs (6)(a), (c) and (d) were omitted.

(2)

Paragraph 3 (preliminary notices) has effect as if sub-paragraph (4) were omitted.

(3)

Paragraph 5 (assessment) has effect as if sub-paragraph (5)(b) were omitted.

(4)

Paragraph 6 (amendment of return) has effect as if—

(a)

after sub-paragraph (2) there were inserted—

“(2A)

Where the syndicate return is amended under sub-paragraph (2), a designated officer must, by notice to each of the relevant corporate members, amend the corporate member’s company tax return so as to give effect to the amendment of the syndicate return.”;

(b)

in sub-paragraph (6), the reference to section 12AD(3) of TMA 1970 were to paragraph 31(3) of Schedule 18 to FA 1998.

(5)

Paragraph 8 (no postponement except before assessment is finalised for tax on same profits) has effect as if the reference in sub-paragraph (2) to all of the relevant accounting periods mentioned in paragraph 1(1)(e) were to the underwriting year.

(6)

Paragraph 9 has effect as if—

(a)

the reference in sub-paragraph (2) to section 28B of TMA 1970 were to paragraph 32 of Schedule 18 to FA 1998;

(b)

the reference in sub-paragraph (3) to section 28B of the TMA 1970 were to paragraph 33 of Schedule 18 to FA 1998;

(c)

for sub-paragraph (4) there were substituted—

“(4)

Where a relevant closure notice issued after the end of the period for amendments amends the syndicate return to more fully reflect the transfer pricing requirement to which the unassessed transfer pricing profits relate, the amendment may not be given effect—

(a)

by amending any relevant corporate member’s tax return in a closure notice, or

(b)

otherwise by an assessment to corporation tax on any of the relevant corporate members.”

“Part 2AUnassessed transfer pricing profits: index of defined expressions used in Part 4A

corporate member (in Part 4 of Schedule A1)	paragraph 13(3) of Schedule A1
designated officer (in Part 4A)	section 217T
foreign tax (in Part 4A)	section 217T
HMRC (in Part 4A)	section 217T
managing agent (in Part 4 of Schedule A1)	paragraph 13(3) of Schedule A1
the other party (in Part 4A)	section 217B(1)
partnership return (in Parts 1 to 3 of Schedule A1)	paragraph 1(6) of Schedule A1
the period for amendments (in Chapter 3 of Part 4A)	section 217I(3) and (4)
relevant corporate partner (in Parts 1 to 3 of Schedule A1)	paragraph 1(6) of Schedule A1
representative partner (in Part 3 of Schedule A1)	paragraph 3(4) of Schedule A1
return period (in Parts 1 to 3 of Schedule A1)	paragraph 1(6) of Schedule A1
relevant accounting period (in Parts 1 to 3 of Schedule A1)	paragraph 1(6) of Schedule A1
self-assessment (in Part 4A)	section 217B(5)
syndicate (in Part 4 of Schedule A1)	paragraph 13(3) of Schedule A1
syndicate return (in Part 4 of Schedule A1)	paragraph 13(3) of Schedule A1
underwriting year (in Part 4 of Schedule A1)	paragraph 13(3) of Schedule A1”

“(5B)

See section 217N of TIOPA 2010 concerning the application of this section in the case of an assessment of a company’s unassessed transfer pricing profits under Part 4A of that Act.”