Part 4Transfer pricing
CHAPTER 6Balancing payments
199Pre-conditions for making election under section 200
1
Conditions A to E are the pre-conditions for the purposes of section 200.
2
Condition A is that both of the affected persons are companies.
3
Condition B is that only one of the affected persons (“the advantaged person”) is a person on whom a potential advantage in relation to United Kingdom taxation is conferred by the actual provision.
4
Condition C is that the other affected person (“the disadvantaged person”) is within the charge to income tax or corporation tax in respect of profits arising from the relevant activities (see section 216).
5
Condition D is that the actual provision is provision in relation to a security (the “relevant security”).
6
Condition E is that the capital market condition is met (see section 204).
7
In subsections (5) and (8)(a) “security” includes securities not creating or evidencing a charge on assets.
8
For the purposes of subsection (5), any—
a
interest payable by a company on money advanced without the issue of a security for the advance, or
b
other consideration given by a company for the use of money so advanced,
is to be treated as if payable or given in respect of a security issued for the advance by the company, and the reference in subsection (5) to a security is to be read accordingly.