Taxation (International and Other Provisions) Act 2010 section 174A

Claims under section 174 where disadvantaged person within charge to income tax

Section 174A restricts the right to claim a compensating adjustment under the transfer pricing rules where an individual or non-corporate taxpayer has been disadvantaged by the pricing arrangement and the advantaged party is a company.

• Where transfer pricing rules apply and one party has been disadvantaged, that party may normally claim a compensating adjustment under section 174
• This section blocks such a claim where the disadvantaged person is an individual or other non-corporate taxpayer subject to income tax on the relevant profits
• The restriction applies specifically where the advantaged person — the party whose profits have been adjusted upwards under the transfer pricing rules — is a company
• In practice, this means an individual who is on the losing side of a transfer pricing arrangement with a connected company cannot claim a corresponding reduction in their own tax liability