Corporation Tax Act 2009 section 532

The associated transactions condition

Section 532 sets out the associated transactions condition, which is one of the conditions that must be met for the transfer pricing rules in Part 4 to apply to a transaction between two connected parties.

• The associated transactions condition is met where a transaction between two persons is made or imposed by means of, or in relation to, a series of transactions that include one or more transactions between those persons and one or more transactions between one of those persons and a third party.
• This condition targets arrangements where the pricing between two connected parties is influenced or facilitated by linked transactions involving third parties, so that the overall effect is the same as if the two connected parties had transacted directly on non-arm's length terms.
• The condition ensures that companies cannot avoid the transfer pricing rules by routing transactions through intermediaries or structuring a series of steps that, taken together, achieve a non-arm's length outcome.
• Where the associated transactions condition is met, the transfer pricing provisions apply as if the series of transactions were a single arrangement between the connected parties, and any resulting tax advantage can be counteracted.