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HMRC internal manual

International Manual

Transfer Pricing: methodologies: Mutual Agreement Procedure: SP1/11: methods of giving relief

Statement of Practice 1/11: 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 S124(2) TIOPA 2010, formerly S815AA(2) ICTA 1988. Where normal time limits may have expired before a solution or mutual agreement is reached, a claim for relief consequential to that solution or mutual agreement, for example to losses, group relief, capital allowances etc., must be made within twelve months following the notification of the solution or mutual agreement (S124(4) TIOPA 2010, formerly S815AA(3) ICTA 1988).

Where a claim for relief is made in pursuance of an agreement or opinion reached under the Arbitration Convention, normal time limits for claiming relief under the Taxes Acts do not apply so there is no time limit for claiming the appropriate relief (S127(5) TIOPA 2010, formerly S815B(3) ICTA 1988).

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 deduction against UK profits or by tax credit. Following agreement between the competent authorities, the UK taxpayer will usually be invited to submit revised computations reflecting the agreed relief.

The UK does not accept that it is permissible for a taxpayer to make, unilaterally, an adjustment through its accounts and return to obtain corresponding relief for an adjustment which reduces its UK tax liability either when self-assessing or in response to an adjustment imposed by another jurisdiction. The only avenue to relief is presentation of a case invoking MAP.