Policy paper

Compensating adjustments

This Tax Information and Impact Note removes the ability of individuals to claim compensating adjustments where the counterparty to the transaction is a company.

Documents

Compensating adjustments

Request an accessible format.
If you use assistive technology (such as a screen reader) and need a version of this document in a more accessible format, please email different.format@hmrc.gov.uk. Please tell us what format you need. It will help us if you say what assistive technology you use.

Details

Transfer pricing legislation concerns the prices charged in transactions between connected parties. Where the actual price differs from the price that would have occurred had that connection not existed, the legislation replaces the actual price with the ‘arm’s length price’.

Within the UK, if rules adjust prices to increase one side’s profit, a claim can be made to reflect the same price for the other side. This adjustment is known as a compensating adjustment. The measure will remove the ability of individuals to claim compensating adjustments where the counterparty to the transaction is a company.

Updates to this page

Published 30 October 2013

Sign up for emails or print this page