Taxation (International and Other Provisions) Act 2010 section 202

Election, in guarantee case, to pay tax rather than make balancing payments

Section 202 allows a disadvantaged person in a guarantee scenario to elect to pay the advantaged person's tax liability directly, instead of making a balancing payment to them.

• Where all the pre-conditions in section 201 are met, the disadvantaged person (typically the guarantor) may make an election under this section.
• The election allows the disadvantaged person to choose not to make a balancing payment to the advantaged person in connection with the transfer pricing adjustment arising from the guarantee arrangement.
• Instead, the disadvantaged person takes on sole responsibility for paying the advantaged person's additional tax liability for the relevant chargeable period, to the extent that liability arises from the arm's length adjustment applied because of the guarantee.
• Further rules on how the election is made and what happens once it takes effect are set out in section 203.