Taxation (International and Other Provisions) Act 2010 section 168

Medium-sized enterprises: exception from exemption: transfer pricing notice

Section 168 allows HMRC to issue a transfer pricing notice to a medium-sized enterprise, removing the exemption from transfer pricing rules that would otherwise apply.

• Medium-sized enterprises normally benefit from an exemption from the transfer pricing rules under section 166, but this exemption can be overridden by HMRC.
• HMRC can issue a formal notice (called a "transfer pricing notice") to the person who potentially benefits from the non-arm's length arrangement.
• Once a transfer pricing notice is issued, the medium-sized enterprise must calculate its profits and losses for the relevant chargeable period using arm's length pricing, as if the exemption did not exist.
• This power applies specifically to medium-sized enterprises; small enterprises are not subject to this notice mechanism.