Revenue Note for Guidance

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Revenue Note for Guidance

835H Elimination of double counting


This section eliminates double counting in the case of domestic transactions.



(1) Where the profits or gains or losses of a person that are chargeable to tax are adjusted by virtue of section 835C and the counterparty to the transaction is within the charge to tax under Schedule D in respect of the relevant activities, that other person may claim a corresponding downward adjustment to that person’s profits or gains or losses.

Trading stock

(2) Where relief is being given to the counterparty to a transaction by way of an increase in the cost of purchases, this subsection provides that, should any of those purchases remain in stock at the end of the accounting period, the closing stock value of that stock is unaffected by these provisions. This ensures that a transfer pricing adjustment will not adversely affect cash flow within a group.


(3) Relief will be available under subsection (1) once tax in relation to the upward adjustment has been paid.

(4) Where the profits of a foreign branch are adjusted downwards, credit for foreign tax will be available by reference to the branch profits as so reduced.

(5) The practice that profits on development land acquired by a group as trading stock are taxed when the land is sold outside the group is maintained. Where such land is transferred within a group the companies involved can elect that the existing treatment continues to apply.

Relevant Date: Finance Act 2021