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HMRC internal manual

International Manual

Transfer Pricing: methodologies: Mutual Agreement Procedure: Methods of giving relief


Where a solution or mutual agreement is reached under the terms of a UK tax treaty, it will be given effect notwithstanding anything in any enactment in accordance with TIOPA 2010, section 124(2).


There may be consequential claims available where the resolution of the MAP increases losses available to the affected person. If the normal time limits have expired before the solution or mutual agreement is reached, a claim for relief consequential to that solution or mutual agreement, for example to loss carry back, group relief etc., must be made within 12 months following the notification of the solution or mutual agreement (TIOPA 2010, section 124(4)). Where a claim for relief is made in pursuance of an agreement or opinion reached under the EUAC, normal time limits for claiming relief under the Taxes Acts do not apply so that relevant claims can be made in conjunction with giving effect to the solution or mutual agreement (TIOPA 2010, section 127(5)).


The manner in which relief is granted by the UK depends on the facts and circumstances of the particular case. Relief may be granted either by discharge, repayment of tax, tax credit or by amended assessment or otherwise (TIOPA 2010 section 124(3)). Following agreement between the Competent Authorities, the UK taxpayer will usually be invited to submit its claim or amended assessments online. Where the taxpayer does not have a Customer Compliance Manager to manage the process of implementing the claim, the UK Competent Authority will provide support to ensure that the agreement or solution is implemented.


It is not uncommon for other tax authorities to require formal written agreement to the Competent Authority agreement from their taxpayer before implementing the agreement. Where this requirement exists the UK will not implement the agreement until the other tax authority confirms that it has the required agreement from its taxpayers. Experience has shown that taxpayers’ failure to confirm agreement to the Competent Authority agreement can significantly delay implementation of MAP agreements.


Tax, Interest and Penalties

The UK does not require tax to be paid as a condition to enter into MAP. The payment of tax due on any assessments raised or determinations made may be suspended until the MAP is resolved. The tax may be suspended through the normal appeals process.


The normal rules for charging interest on tax paid late apply to tax suspended pending resolution of the MAP discussion. Similarly repayment interest will be paid on tax overpaid on amounts relieved in the UK.


The UK will repay the appropriate proportion of any tax-based penalty charged on a UK adjustment that is reduced or withdrawn as a result of an agreement under MAP.