Taxation (International and Other Provisions) Act 2010 section 174

Claim by the affected person who is not potentially advantaged

Section 174 allows the party that is disadvantaged by a non-arm's length transaction between connected persons to make a claim to recalculate its profits or losses on an arm's length basis, thereby obtaining corresponding tax relief.

• Where a transaction between two connected persons gives a tax advantage to one party (the "advantaged person"), the other party (the "disadvantaged person") may claim to have its profits or losses recalculated as if the transaction had been conducted at arm's length.
• The disadvantaged person must be within the charge to UK income tax or corporation tax on profits from the relevant activities in order to make a claim.
• If a valid claim is made, all necessary tax adjustments must be carried out for the disadvantaged person, even if normal time limits for making adjustments have expired.
• The claim is subject to several conditions and limitations, including rules about trading stock, double taxation relief, loan relationship exchange gains and losses, and derivative contract exchange gains and losses.