HM Revenue and Customs (HMRC) settled the UK’s Transfer Pricing rules such a way that the pricing of transactions between connected can result into an increased revenue yield. The internationally recognized ‘arm’s length principle’ is followed in this settlement.
The figures are also positive in case of Advance Pricing Agreements (APAs) increasing to 49 from 32 in the previous year. During the year 2010/11 35 APAs were agreed, with 69 applications on hand at end of the year. 50% of agreements were made within 14 months, compared with 16.5 months the previous year.
The statistics of the Advance Thin Capitalization Agreement (ATCAs) also showed a positive trend, where 127 agreements were with 173 applications on hand at the end of March, 2011. During 2010/11, a total of 231 agreements were in force. It took HMRC an average of 9.8 months to reach an agreement, with 50% of agreements reached within 6.9 months. Compared with 45 Mutual Agreement Procedure (MAP) cases in the previous year, 40 were resolved in 2010/11. 39 cases were admitted, as against the 51 resolved in 2009/10. HMRC had 92 cases on hand at the end of March, 2011. It took HMRC an average of 27 months to resolve cases among which 50% were resolved within 19 months.
