How is 'control' defined for transfer pricing purposes under section 217 of TIOPA 2010?

Section 217 defines control of a body corporate or firm by reference to section 1124 of the Corporation Tax Act 2010. This is the standard control test used widely across United Kingdom corporation tax legislation and determines whether parties are sufficiently connected for the transfer pricing rules in Part 4 of the Act to apply.

What is the special oil sale transfer pricing rule in section 217 TIOPA 2010?

When a sale of oil involves a producer whose ordinary share capital is at least 20% owned, directly or indirectly, by the buyer or companies linked to the buyer, the transfer pricing rules apply as if the buyer, seller and producer were all controlled by the same person. This ensures arm's length pricing even without standard control.

What does 'linked companies' mean under section 217 TIOPA 2010?

Two companies are considered linked if one controls the other or both are under the control of the same person or persons. Indirect ownership of ordinary share capital is determined in the same way as under Chapter 3 of Part 24 of the Corporation Tax Act 2010. Extraction rights count even if exercisable only jointly with other companies.

How are 'oil' and 'firm' defined in section 217 of TIOPA 2010?

Oil is given a broad meaning and includes any mineral oil, relative hydrocarbon oil and natural gas. A firm means the persons who carry on a trade, profession or other business together in partnership, referred to collectively. These definitions apply throughout the transfer pricing provisions in Part 4 of the Taxation (International and Other Provisions) Act 2010.

Taxation (International and Other Provisions) Act 2010 section 217

Meaning of "control" and "firm"

Section 217 defines "control" and "firm" for the purposes of the transfer pricing rules, and applies a special expanded meaning of "control" when applying transfer pricing to certain oil sales between companies.

Control of a body corporate or firm is determined by reference to section 1124 of the Corporation Tax Act 2010, which provides the standard definition used across the corporation tax code.
A special rule applies to oil sales: where at least 20% of the oil-producing company's ordinary share capital is owned (directly or indirectly) by the buyer or companies linked to the buyer, the buyer, seller and producer are all treated as controlled by the same person for transfer pricing purposes.
Two companies are "linked" if one controls the other, or both are controlled by the same person or persons; and "oil" includes mineral oil, hydrocarbon oil and natural gas.
A "firm" means persons who carry on a trade, profession or other business in partnership, referred to collectively.

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