𝐔𝐊 𝐂𝐨𝐮𝐫𝐭 𝐨𝐟 𝐀𝐩𝐩𝐞𝐚𝐥 𝐂𝐨𝐧𝐟𝐢𝐫𝐦𝐬 𝐋𝐢𝐦𝐢𝐭𝐬 𝐨𝐟 𝐀𝐏𝐀𝐬 𝐢𝐧 𝐑𝐞𝐟𝐢𝐧𝐢𝐭𝐢𝐯 𝐓𝐫𝐚𝐧𝐬𝐟𝐞𝐫 𝐏𝐫𝐢𝐜𝐢𝐧𝐠 𝐂𝐚𝐬𝐞

5 November 2024

The Court of Appeal of England and Wales examined a dispute between Refinitiv group companies and HM Revenue & Customs concerning the application of diverted profits tax to intra-group service arrangements. HMRC issued significant tax assessments, arguing that profits allocated outside the UK did not reflect the arm’s-length principle.

Refinitiv contended that its transfer pricing approach was consistent with an earlier Advance Pricing Agreement agreed with HMRC, which applied a cost-plus methodology to certain intra-group services. The group argued that this framework supported the arm’s-length nature of its arrangements.

HMRC maintained that the APA only applied to the specific years it covered and did not restrict the application of diverted profits tax in later periods. The tax authority asserted that it was entitled to reassess the profit allocation under a different methodology once the APA had expired.

In its November 2024 judgment, the Court of Appeal upheld HMRC’s position, confirming that APAs are limited to the periods explicitly covered and do not prevent the use of other statutory regimes in subsequent years.

The decision highlights the importance of understanding the time limits of APAs and the potential exposure to broader transfer pricing and anti-avoidance rules once those agreements expire.

Find The Full English Translation: UK vs REFINITIV AND OTHERS (Thomson Reuters): JUDGMENT - Academy of Tax Law