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HMRC internal manual

International Manual

Transfer pricing operational guiance: Comparability Analysis

The practical application of the arm’s length principle requires the undertaking of a “comparability analysis” which is a comparison of the terms and conditions of the controlled transaction between associated enterprises with those that would have been made in a comparable transaction undertaken by independent enterprises in comparable circumstances (see paragraph 1.33 of the Guidelines).


A comparability analysis involves two key aspects:


  1. accurate delineation of the controlled transaction.
  2. comparison of the price and conditions of the controlled transaction with those of a comparable transaction between independent enterprises.


Guidance on the accurate delineation of the transaction can be found at INTM485022 onwards and guidance on the comparison with uncontrolled transactions can be found at INTM485060 onwards.