Taxation (International and Other Provisions) Act 2010 section 195

Qualifying conditions for purposes of section 196

Section 195 sets out the four qualifying conditions (A to D) that must be met before a balancing payment between two connected parties can be treated as having no charge to, or relief from, tax under section 196.

• Only one of the two connected persons (the "advantaged person") must have gained a UK tax advantage from the non-arm's length arrangement
• The other connected person (the "disadvantaged person") must be within the charge to UK income tax or corporation tax on profits from the relevant activities
• One or more balancing payments must be made by the disadvantaged person to the advantaged person
• The sole or main reason for making the balancing payment(s) must be that the transfer pricing rules under section 147(3) or (5) apply