Taxation (International and Other Provisions) Act 2010 section 213

Capital allowances

Section 213 deals with the interaction between transfer pricing rules and capital allowances, ensuring that transfer pricing adjustments do not generally alter capital allowance or balancing charge calculations.

• Transfer pricing rules in Part 4 of the Act do not affect the calculation of capital allowances or balancing charges under the Capital Allowances Act 2001.
• An exception exists for claims made under section 174, which allows the non-advantaged party in a connected-party transaction to make a corresponding adjustment.
• Even where a section 174 claim is permitted, it cannot be made if it would affect specific capital allowance provisions relating to decommissioning services or site restoration in the mining and oil industries (sections 165A to 165E and 416ZC to 416ZE of the Capital Allowances Act 2001).
• The effect is to ring-fence capital allowance computations from transfer pricing interference, with only narrow exceptions for corresponding adjustments that do not impact oil and mining decommissioning or restoration allowances.