UK Act of Parliament 2010 United Kingdom

TIOPA 2010

Taxation (International and Other Provisions) Act 2010

What this means for your business

9 obligations
1 guides
Applies to
United Kingdom
On this page
9 compliance obligations, 1 practical guide
Read full text on legislation.gov.uk

What you must do

9 compliance obligations under this legislation.

Risk assessment 2

Calculate and claim corporation tax credit on trade income correctly

If your company wants a tax credit for income that comes from a trade, you must work out the credit so it never exceeds the corporation tax that relates to that income. You need to include any deductions and expenses that can be reasonably linked to the income and apportion them correctly.

Director/Officer s.44 HMRC When your company claims a corporation tax credit arising from trade income

Calculate foreign tax credit limits for nonā€‘trading credits

If your company has a nonā€‘trading credit (e.g., from a loan relationship, derivative or intangible asset) and you want to claim a foreign tax credit against UK tax, you must work out the maximum credit you can claim using a specific formula. The calculation takes into account the size of the credit, related nonā€‘trading debits and any foreign tax already used on other credits in the same accounting period.

Director/Officer s.49B HMRC When the company has a nonā€‘trading credit and is claiming a foreign ā€¦

Management duties 2

Calculate and limit loanā€‘relationship tax credit for UK companies with CFC links

If your UK company claims tax relief from loans that are linked to a controlled foreign company (CFC) with a qualifying loan relationship, you must cap the credit you claim. The cap is worked out each accounting period using a specific formula (Rā€ÆƗā€ÆS or a proportion of it) based on the profit amount and your share of that profit. You must ensure the claim does not exceed this limit or HMRC may disallow the excess.

Trader/Business s.49A HMRC When your company makes a loanā€‘relationship tax credit claim that arises from ā€¦

Calculate foreign tax credit within the statutory limit

If your business claims a credit for foreign tax against your UK income tax, you must work out the credit using the formula set out in this section. The credit cannot be larger than the difference between the tax you would pay with and without the foreign income, and you must apply the calculation in the order that gives you the biggest tax reduction.

Any Person s.36 HMRC When claiming a foreign tax credit against UK income tax for a ā€¦

Notifications 2

Notify HMRC if a foreign tax reduction becomes too large

If your business has claimed a reduction in UK tax because of foreign tax (e.g. a foreign tax credit or deduction) and later a foreign tax adjustment makes that reduction excessive, you must tell HMRC about it. The notice has to be sent in writing to an HMRC officer within one year of the adjustment.

Any Person s.115 HMRC An original tax reduction claimed under sections 112 or 113 becomes excessive ā€¦

Notify HMRC if foreign tax credit is reduced or becomes excessive

If your business has claimed a credit for foreign tax and later that credit is cut or becomes too large because of a tax adjustment (that isnā€™t a Lloydā€™s adjustment), you must inform HMRC within a year. Not doing so can lead to a penalty up to the amount of the credit reduction.

Any Person s.80 HMRC A foreign tax credit previously allowed is reduced or becomes excessive due ā€¦

Reporting and filing 3

Calculate and claim capital gains tax credit within the allowed limit

If you want to claim a credit against your capital gains tax under sectionā€Æ18(2), you must work out the credit so it does not exceed the difference between the tax you would owe on all your gains and the tax you would owe if the gain being credited were removed. When you have more than one gain, you must apply the calculation in the order that gives you the biggest overall tax reduction and report the credit on your tax return.

Any Person s.40 HMRC When you claim a credit against capital gains tax under s.18(2) for ā€¦

Make a tax return calculation on an armā€™sā€‘length basis before claiming relief

If you want to claim relief under sectionā€Æ174, you must first have prepared your tax return (or the relevant calculation) as if the armā€‘length provision had been used instead of the actual provision. In other words, the figures you put on the return must reflect an armā€‘length price before you can make the claim.

Any Person s.176 HMRC When you intend to make a claim under section 174 (transferā€‘pricing relief)

Show no special relationship or calculate royalty rates for HMRC

If your business pays royalties to a party that could be linked to you (a "special relationship"), you must be able to prove to HMRC that no such relationship exists, or, if it does, work out the royalty rate you would have paid on an armā€‘length basis. This means keeping clear records of who owned the underlying asset and the calculations you would have used.

Trader/Business s.133 HMRC When you make royalty payments that fall within the specialā€‘relationship rules (s.132) ā€¦

Practical guidance

Our guides explain how to comply with the requirements above.

Transfer pricing rules for UK businesses

When transfer pricing rules apply to UK businesses, how the arm's length principle works, the SME exemption and its exceptions, ā€¦

Sections and provisions

500 classified provisions from this legislation.

10 Duties 22 Powers 134 Definitions 33 Exemptions

Duties 10

  • s.36 Amount of limit
  • s.40 Amount of limit
  • s.44 Credit against tax on trade income
  • s.49B Applying section 42(2) to non-trading credits from loan relationships etc
  • s.49A Limit on credit in cases involving qualifying loan relationships of CFCs
  • s.80 Duty to give notice that adjustment has rendered credit excessive
  • s.115 Duty to give notice that adjustment has rendered reduction too large
  • s.133 Special relationship rule for royalties: matters to be shown by taxpayer
  • s.176 Claims under section 174: advantaged person must have made return
  • s.229 Modifications of agreement for double taxation purposes The Commissioners

Powers 22

  • s.52 General deductions
  • s.97A Commercial allocation of relevant income to different categories of long-term business
  • s.128A Power by regulations to give effect to international obligations etc
  • s.128 Disclosure under the Convention
  • s.129 Disclosure where relief given overseas for tax paid in the United Kingdom
  • s.174 Claim by the affected person who is not potentially advantaged
  • s.200 Election to pay tax rather than make balancing payments
  • s.202 Election, in guarantee case, to pay tax rather than make balancing payments
  • s.259ZMB Claims for allocation of DII surplus
  • s.259L Adjustments where suppositions cease to be reasonable
  • s.283 Power to make regulations about statement of allocated disallowances
  • s.295 Power to make regulations about statement of allocated exemptions
  • s.297 Power to make regulations in relation to reductions under section 296
  • s.366 Power to amend the alternative finance provisions
  • s.371UC Just and reasonable apportionments
  • s.371RB Legal and economic control
  • s.371FE Exclusion: insurance business
  • s.371II Power to amend definitions
  • s.486 Election altering period of account deemed under section 485
  • s.497 Change in accounting standards
  • ... and 2 more powers

Definitions 134

  • s.2 Giving effect to arrangements made in relation to other territories
  • s.8 Interpretation: ā€œ unilateral relief arrangements ā€ means rules 1 to 9, etc
  • s.15 Rule 7: credit for underlying tax on dividend paid to sub-10% associate
  • s.16 Rule 8: credit for underlying tax on dividend paid by exchanged associate
  • s.21 Meaning of ā€œthe arrangementsā€, ā€œthe non-UK territoryā€, ā€œforeign taxā€ etc the arrangements the non-UK territory foreign tax
  • s.28 Unilateral relief for Isle of Man or Channel Islands tax
  • s.30 Unilateral relief for non-UK tax on non-resident's UK branch or agency etc
  • s.49 Restricting section 44(3) if company is a bank or connected with a bank
  • s.53 Earlier years' non-trading deficits on loan relationships
  • s.59 Meaning of ā€œrelevant profitsā€ in section 58
  • s.67 Restriction of relief if underlying tax at rate higher than rate of corporation tax
  • s.68 Meaning of ā€œavoidance schemeā€ in section 67 avoidance scheme arrangement
  • s.71 Foreign taxation of group as single entity
  • s.78 Meaning of ā€œoverseas permanent establishmentā€
  • s.83 Schemes and arrangements referred to in section 82(4)
  • s.85A Section 83(2) and (4): schemes involving deemed foreign tax
  • s.88 Section 83(2) and (4): schemes involving tax-deductible payments
  • s.95 Interpretation of sections 89 to 94
  • s.101 Second limitation for purposes of section 99(2)
  • s.105 Meaning of ā€œchargeable gainā€
  • ... and 114 more definitions

Exemptions 33

  • s.7 General regulations
  • Schedule 7 Miscellaneous relocations
  • s.31 Calculation of income or gain where remittance basis does not apply
  • s.61 Calculation if section 58 does not apply
  • s.65 Relief for underlying tax paid by company lower in dividend-paying chain
  • s.112 Deduction from income for foreign tax (instead of credit against UK tax)
  • s.117 Tax treated as chargeable in respect of transfer of loan relationship, derivative contract or intangible fixed assets
  • s.119 Tax treated as chargeable in respect of transfer of loan relationship, derivative contract or intangible fixed assets
  • s.127 Giving effect to agreements, decisions and opinions under the Convention
  • s.130 Interpreting provision about UK taxation of profits of foreign enterprises
  • s.164 Part to be interpreted in accordance with OECD principles
  • s.166 Exemption for small and medium-sized enterprises
  • s.168 Medium-sized enterprises: exception from exemption: transfer pricing notice
  • s.171 Tax returns where transfer pricing notice given
  • s.196 Balancing payments between affected persons: no charge to, or relief from, tax
  • s.206A Modification of basic rule where allowances restricted for certain expenditure
  • s.209 Determinations exempt from requirement for Commissioners' sanction
  • s.211 Restriction of right to appeal against Commissioners' approval
  • s.213 Capital allowances
  • s.253 Exception for dealers
  • ... and 13 more exemptions