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HMRC internal manual

Tonnage Tax Manual

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HM Revenue & Customs
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Partnerships: The ring fence

Transfer-pricing

The transfer pricing provisions described in TTM07300will apply to certain transactions between a partnership and its partners, if that partnership includes both a tonnage tax partner and a non-tonnage tax partner.

Transactions with tonnage tax partner

The transfer pricing rules will apply to transactions between a tonnage tax company and a partnership if:
 

  • that tonnage tax company is a ‘major participator’ in the partnership, and
  • the partnership also includes a non-tonnage tax partner who is also a ‘major participator’.

Transactions with non-tonnage tax partner

The transfer pricing provisions will also apply to transactions between a non-tonnage tax company and a partnership if
 

  • that non-tonnage tax company is a ‘major participator’ in the partnership, and
  • the partnership includes a tonnage tax partner who is also a ‘major participator’.

Major participator

The definition of ‘major participator’ is in TIOPA10/S160 (3)-(5).  Broadly, the effect of this is that two partners will be major participators in a partnership if they each have at least a 40 per cent interest.

References

FA00/SCH22/PARA58 (transfer pricing across the ring fence) TTM17331
   
SI00/2303/REG13 (transactions between partnership and partner) TTM18013