INTM422120 - Transfer pricing: methodologies: Advance Pricing Agreements: revising and renewing

Revising APAs

55. In some cases the APA may provide for modification of its terms in specific circumstances; for example, a particular agreement may provide that where there has been a change which makes the agreed methodology difficult to apply, but which does not go as far as to invalidate a critical assumption, the agreement may be modified with the consent of the parties to resolve that difficulty. In such cases the APA may be revised in accordance with Section 225, TIOPA 2010 after consultations between the business and HMRC and, in the case of bilateral agreements, the Competent Authority of the other country involved.

Renewing APAs

56. Where the facts and circumstances have not changed, the business may request renewal of an APA through an EOI in the final year of an APA, ideally not later than 6 months before the expiry of its current term. HMRC will not rule as out of time an application if made before submission of the tax return for the first chargeable period affected by the renewal provided that the other administration is also prepared to allow a renewal request at this later time. The format, processing, and evaluation of the renewal application would usually be similar to those for the initial APA application. The previous APA will not set a precedent for the renewal APA as the tax administrations are not bound by the previously agreed APA terms and conditions. The renewal of an APA is not automatic and depends on the consent of all parties concerned and on the business demonstrating, among other things, compliance with the terms and conditions of the existing APA.