Commentary on Sections Overview Overview
356.This Chapter provides for claims to be made by the person whose profits have increased or losses decreased (the disadvantaged person) as a result of another person’s profits decreasing (the advantaged person). The claim prevents double taxation and is only relevant where both the advantaged and disadvantaged persons are liable to UK taxation.
357.Suppose company A sells goods to connected company B for an amount less than an arm’s length price would require. While this reduces A’s profits it increases B’s profits by the same amount. B may therefore make a claim to reduce its profits by the same amount by which A’s are increased to avoid double taxation on the arm’s length differential which would otherwise arise.