New HMRC Statement of Practice
HMRC have published a new Statement of Practice (1/11) entitled ‘Transfer pricing, mutual agreement procedure and arbitration’ that sets out the HMRC’s approach to methods for reducing or preventing double taxation. The new Statement of Practice supersedes the guidance in HMRC Tax Bulletins 25 and 31.
The statement describes HMRC’s approach to the use of mutual agreement procedure (MAP) under the relevant UK Double Taxation Convention and/or the EU Arbitration Convention. The statement also considers the use of arbitration by HMRC when the MAP is unsuccessful.
HMRC have also published an updated guide which includes an index and full text of all statements issued up to 15 February 2011. The guide can be found on HMRC’s website atwww.hmrc.gov.uk/practitioners/sop.pdf
Statements of practice explain HMRC’s interpretation of legislation and do not affect a taxpayer’s right to argue for a different interpretation, if necessary in an appeal to an independent tribunal.