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HMRC internal manual

International Manual

HM Revenue & Customs
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Profits attributable to a permanent establishment of a UK resident company - TIOPA10/S43: allotted free capital outside the arm’s length range

TIOPA10/S43(6) makes it clear that the attribution of capital in accordance with S43(3) - (5) prevail over any allotment of capital to the permanent establishment by the company. If any amounts of free capital allotted to PEs in the company’s books and records are in excess of the amounts to be attributed under S43(3) - (5) they must be adjusted downwards for the purposes of the tax computation to give a result consistent with these provisions.