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Advance pricing agreements

Availability and eligibility

Are advance pricing agreements with the tax authorities in your jurisdiction possible? If so, what form do they typically take (eg, unilateral, bilateral or multilateral) and what enterprises and transactions can they cover?

Unilateral, bilateral and multilateral advance pricing agreements, as well as advance thin capitalisation agreements, are available.

Rules and procedures

What rules and procedures apply to advance pricing agreements?

The following provide for and apply to advance pricing agreements:

  • Sections 218 to 230 of the Taxation (International and Other Provisions) Act 2010;
  • Her Majesty’s Revenue and Customs (HMRC) Statement of Practice 2 (2010) (and Statement of Practice 1/2012 in relation to Advance Thin Capitalisation Agreements); and
  • HMRC Guidance INTM422000.


How long does it typically take to conclude an advance pricing agreement?

According to the most recent statistics from HMRC, the average completion time for an advance pricing agreements is approximately 33 months. However, the time taken can differ drastically depending on the parties involved and the subject matter of the advance pricing agreement.

What is the typical duration of an advance pricing agreement?

Advance pricing agreements typically have a five-year maximum term.


What fees apply to requests for advance pricing agreements?

There is no filing fee.

Special considerations

Are there any special considerations or issues specific to your jurisdiction that parties should bear in mind when seeking to conclude an advance pricing agreement (including any particular advantages and disadvantages)?

In practice, advance pricing agreement applications are more likely to be successful if the transfer pricing issues are complex and there is uncertainty as to how the arm’s-length standard should be applied. HMRC also must be satisfied that negotiating the advance pricing agreement is a good use of its resources and that there is a high probability of double taxation without an advance pricing agreement in place.

HMRC strongly favours negotiating either bilateral or multilateral advance pricing agreements, except where:

  • the relevant jurisdiction is not signatory to a tax treaty with the United Kingdom;
  • a treaty partner has no established advance pricing agreement programme; or
  • HMRC considers that there is little to be gained by seeking a bilateral agreement.

HMRC has also implemented monitoring and compliance measures once an advance pricing agreement has been successfully implemented. Taxpayers must provide an annual report accompanying a business tax return for the duration of the advance pricing agreement. The details that the taxpayer is required to include in the annual report are determined on a case-by-case basis.

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