RPDT20240 - The charge to RPDT: adjusted trading profits and losses:transfer pricing within a company

RPDT20230 explains that the normal transfer-pricing rules in TIOPA10/PART4 also apply to transactions (i.e. provisions made or imposed) between UK persons, where one of those persons is a residential property developer tax company (and the relevant control conditions etc. are met).

This principle is extended still further, so that TIOPA10/PART4 applies even where a transaction is between two parts of a RPDT company: where one part of its trade is subject to RPDT and one is outside the scope of RPDT.

For example, if a RPDT company operates a construction products manufacturing division as well as developing residential property, and those construction products are provided to the developer division, the taxable profits arising from the development activity must be calculated as if the construction products were provided on arm’s length terms.

Any payments made for RPDT group relief are not to be taken into account in calculating RPD profits and RPDT itself is not an allowable expense, FA22/S40(5), FA22/SCH7/PARA19, FA22/SCH9/PARA1 & FA22/SCH9/PARA2

RPDT01100 contains a general introduction to RPDT and a list of abbreviations used.