Taxation (International and Other Provisions) Act 2010 section 154

Interpretation of sections 152 and 153

Section 154 defines key terms used in sections 152 and 153, which deal with the arm's length provision where the actual provision relates to securities and guarantees in a transfer pricing context.

• A "special relationship" is any relationship through which the participation condition (section 148) is met between the affected persons — essentially, where parties are connected for transfer pricing purposes.
• A "guarantee" is broadly defined to include not only formal sureties but also any informal relationship, arrangement, connection or understanding where the lender has a reasonable expectation of being paid by another company if the borrower defaults.
• A "participatory relationship" exists between two companies where one participates directly or indirectly in the management, control or capital of the other, or a third party participates in both.
• The term "security" is given an extended meaning: it covers securities that do not create or evidence a charge on assets, and any interest or consideration paid on an unsecured cash advance is treated as though a security had been issued for that advance.