Corporation Tax Act 2009 section 846

Transfers not at arm's length

Section 846 explains when the market value rule for transfers between related parties is switched off because the transfer pricing rules apply instead, and how any remaining gap between the transfer pricing amount and market value is handled.

• Where a transfer of an intangible fixed asset between related parties falls within the transfer pricing rules (Part 4 of TIOPA 2010), the normal market value substitution rule in section 845 does not apply
• The transfer pricing rules take priority whether the consideration is actually adjusted under those rules or simply falls within their scope without requiring adjustment
• If the market value of the asset exceeds the amount brought into account under the transfer pricing rules (the "Part 4 TIOPA amount"), the excess must also be brought into account for corporation tax purposes
• A transfer falls within the transfer pricing rules without adjustment where the parties meet the participation condition and the actual terms of the transaction do not differ from what would have been agreed at arm's length