Taxation (International and Other Provisions) Act 2010 section 161

Indirect participation: sections 148, 175 and 219(2): financing cases

Section 161 deals with situations where a person who acts together with others to provide financing to a company or firm can be treated as indirectly participating in that entity's management, control or capital for transfer pricing purposes.

• Where a group of persons act together to provide financing arrangements to a company or firm, an individual member of that group can be treated as indirectly participating in the management, control or capital of the borrower, triggering the transfer pricing rules.
• The test is whether the person would be taken to have control of the borrower if the rights and powers of all the other persons acting together were attributed to that person — this attribution can be assessed at the time they were acting together or within six months of ceasing to do so.
• It does not matter whether the persons acted together at the time the actual provision was made or at an earlier time, so long as the collaboration related to the financing arrangements in question.
• Financing arrangements are broadly defined to include any arrangements for providing or guaranteeing debt, capital or other forms of finance, as well as arrangements made in connection with such finance.