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TIOPA10\S205

TIOPA10\S205 extends the application of the transfer pricing rules to cross-ring fence transactions within a single company. The ring fence and non-ring fence activities of a company are treated for the purposes of TIOPA10 Part4 as if they were separate businesses carried on by separate companies under common control.

Transfer pricing adjustments to cross-ring fence transactions are subject to the ‘one way street� principle. They can only be made where the substitution of an arm’s length price would increase ring fence profits.

For example, if a group’s head office services are charged out to its ring fence business at cost then TIOPA10 Part 4 cannot be invoked by the company to substitute a higher arm’s length price that would reduce its ring fence profits for tax purposes.