Commentary on Sections Overview Section 218: Meaning of “advance pricing agreement”
431.This section gives the meaning of an APA and the matters it can cover. It is based on section 85(1) and (2) of FA 1999 and section 153(2) of FA 2003.
432.Subsection (2)(a) applies only to persons other than companies. It is based on section 85(2)(a) of FA 1999, but without the meaning of “permanent establishment” applied by section 153(2)(c) of FA 2003 in cases where the taxpayer is a company. This subsection allows agreement on income chargeable as arising in the United Kingdom under the territorial provisions of ITTOIA (see in particular section 6(2) of that Act).
433.Subsection (2)(b) rewrites section 85(2)(a) of FA 1999 with the modification for companies applied by section 153(2)(c) of FA 2003. It allows agreement in the case of income attributed to a permanent establishment in the United Kingdom under Chapter 4 of Part 2 of CTA 2009.
434.Subsection (2)(c) is based on section 85(2)(b) of FA 1999. For the meaning of permanent establishment see Chapter 2 of Part 24 of CTA 2010.
435.Subsection (2)(d) allows agreement on the territorial location of income and subsection (2)(e) covers transfer pricing matters.
436.Subsection (2)(f) deals with the application of transfer pricing provisions to oil-related ring fence trades.