How does an advance pricing agreement affect the other party to a transaction under section 222 TIOPA 2010?

Under section 222, when HMRC enters an APA with party A, the same transfer pricing conclusions flow through to party B when B makes claims under the transfer pricing rules. B does not need to independently establish whether A has a potential UK tax advantage or what the arm's length provision is — these follow automatically from A's APA.

What transfer pricing questions are determined for the non-party by an APA under section 222?

The questions that carry across to the non-party (B) are whether A gains a potential UK tax advantage from the actual provision and what the arm's length provision would be. These are determined for B to the same extent as they are determined for A under A's advance pricing agreement with HMRC.

What happens if the non-party has its own separate APA with HMRC?

If party B has entered into its own separate advance pricing agreement with HMRC, B's own APA takes priority over any assumptions that would otherwise flow through from A's APA. This ensures that B's directly negotiated terms with HMRC are not overridden by conclusions from another party's agreement.

How are APA assumptions treated within the transfer pricing claims framework?

Any assumptions arising because of the APA are classified as advance-pricing-agreement assumptions for the purposes of the definition of transfer pricing determination in section 185(5). This ensures they integrate correctly into the broader transfer pricing claims framework, including disadvantaged person claims under sections 174 to 178.

Taxation (International and Other Provisions) Act 2010 section 222

Effect of agreement on non-parties

Section 222 explains how an advance pricing agreement (APA) between HMRC and one party (A) affects the other party (B) to a transaction, even though B is not itself a party to that APA.

Where an APA determines transfer pricing questions for party A, the same conclusions flow through to party B when B makes claims under the transfer pricing rules as the disadvantaged person
The questions that carry across to B are whether A gains a potential UK tax advantage from the actual provision, and what the arm's length provision would be
If B has its own separate APA with HMRC, that agreement takes priority over any assumptions flowing from A's APA
Any assumptions arising from the APA are treated as advance-pricing-agreement assumptions for the purposes of the transfer pricing determination definition

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