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Take advantage of our free expert resources, written by the experts at LCN Legal, based on their practical experience of working with multinational groups and their advisers across the globe. If you are interested in these areas, you may wish to bookmark this page to check back regularly for new information.

Transfer Pricing Override Clauses – Yes or No?

Paul Sutton

We are sometimes asked to include ‘Transfer pricing override’ clauses in intercompany agreements (ICAs). These clauses are intended to adjust the contractual price to the price charged for tax purposes if there is a TP adjustment at either end of the transaction. This sounds like a good idea: a clause which can go back in […]

Intercompany Agreements

The four areas of alignment for legal implementation of TP

Paul Sutton

Although we publish detailed checklists for intercompany agreements, and to a great extent ‘the devil is in the detail’, sometimes it’s helpful to remind ourselves of the macro, helicopter view. From this perspective, the 80 / 20 rule applies: 80% of the upside of getting intercompany agreements right (or the downside of getting them wrong) often […]

Intercompany Agreements

HMRC Consultation on New Mandatory TP Documentation

Paul Sutton

On 23 March 2021, HMRC issued a consultation document on proposals to introduce new mandatory requirements for TP documentation. By way of background, the consultation document notes that in the last 5 years (2015/16 to 2019/20), HMRC has brought in over £6 billion in additional tax from transfer pricing compliance activities. Transfer pricing therefore continues […]

Intercompany Agreements

How to scope the Intercompany Agreements you need for Transfer Pricing Compliance

Paul Sutton

Accurately scoping out intercompany transactions is the essential first step in creating, reviewing or updating intercompany agreements for TP compliance. Unless this is done correctly, the resulting agreements are likely to be gibberish, and your TP objectives may fail for lack of legal implementation. The need for alignment between intercompany agreements and TP analysis of […]

Intercompany Agreements

Not another rebranding fail

Paul Sutton

Corporate rebranding projects can be tricky. If you want a laugh, have a look at this short article listing 15 rebranding failures, including some shocking ones such as MasterCard and Gap: https://www.fastprint.co.uk/blog/15-of-the-worst-corporate-rebrands-ever.html So why are we rebranding? We’ve come a long way since we first started in 2013. We now do more business in 2 […]

LCN Updates

TP Advisers: How long is long enough?

Paul Sutton

This is a sensitive subject for many TP advisers. How long is long enough? Of course, I’m talking about the duration of intercompany agreements. Only this week, a Big Four TP adviser suggested that a 6 month notice period was ‘impracticably long’. Maybe that individual hadn’t read the OECD Guidance on the TP aspects of […]

Intercompany Agreements

LCN Legal appoints new partner to support growth

Paul Sutton

LCN Legal, the niche law firm specialising in the legal implementation and maintenance of corporate structures and intercompany agreements for multinational groups, has appointed a new partner from within its ranks. Ivan Hanna, who joined the firm in 2016 following a legal career including Baker & McKenzie, with posts in London, Moscow and Amsterdam, Accenture […]

LCN Updates

New vacancies at LCN Legal: Senior paralegals / junior lawyers

Paul Sutton

LCN Legal is seeking two highly experienced paralegals or junior solicitors / lawyers to join our dynamic and ambitious team. Following a period of training and oversight, the successful applicants will be responsible for, among other things: Providing commercial contract support – drafting / reviewing and proof-reading transaction steps lists, commercial contracts, loan agreements, intercompany […]

LCN Updates

Ugly cousins and Rube Goldberg machines in Transfer Pricing

Paul Sutton

Do you have any ‘ugly cousins’ in your group legal structure? I hasten to say that none of my actual cousins are ugly. But in the legal world of multinational groups, ‘ugly cousins’ are common. Coca-Cola is a prime example. The Court said the group’s intercompany agreements were ‘outmoded’ and ‘inconsistent with their actual behavior’. […]

Intercompany Agreements

Coca-Cola: Contractual terms vs economic substance

Paul Sutton

In transfer pricing analysis, which prevails: the contractual terms of a related party transaction, or the economic substance? The general view expressed by many TP professionals is that economic analysis is king. The Court’s decision in the recent Coca-Cola case shows that this view is at best simplistic – and for practical purposes as a […]

Intercompany Agreements

OECD Guidance on the TP Implications of Covid – A legal perspective

Paul Sutton

The OECD’s guidance issued on 18 December 2020 on the Transfer Pricing implications of Covid (the ‘Covid Guidance’) may not have offered up any real surprises. Certainly that seems to have been the intention, and para 5 of the Covid Guidance states that it should be regarded as an application of existing guidance, and not […]

Intercompany Agreements

New Collaboration: LCN Legal and EXA Operational Transfer Pricing

Paul Sutton

We are very excited to announce a new collaboration between LCN Legal and EXA AG, that brings together EXA AG’s unique Operational Transfer Pricing solutions and LCN Legal’s know-how regarding the creation and maintenance of tax-audit ready Intercompany Agreements which multinational groups need for their transfer pricing compliance. EXA is a leading provider of digital […]

Intercompany Agreements

TP functions vs legal transactions

Paul Sutton

One of the perennial challenges in the legal implementation of transfer pricing policies is reconciling differing perspectives: those of functional analysis on the one hand, and legal rights and obligations on the other. A classic example is routine returns for distribution and production functions, as in the recent Coca-Cola case. As the US Tax Court […]

Intercompany Agreements

Price setting vs outcome testing in Germany and Poland

Paul Sutton

The following article has been kindly contributed by Dr Harold McClure, a New-York based economist who has over 25 years of transfer pricing experience. Dr. McClure received his Ph.D. in economics from Vanderbilt University in 1983 and began his transfer pricing career at the IRS. He later worked at several Big 4 accounting firms, Law […]

Intercompany Agreements

The two types of profit split arrangements in transfer pricing

Paul Sutton

In commercial relationships as in intra-group structures, there are two types of profit split arrangements. In both types, the participants to the arrangement may make (a) an up front contribution of cash or assets, and/or (b) ongoing contributions of services. The distinction is in the nature of the interest which each participant receives. A Type […]

Group Reorganisations

Intercompany Agreements

Video Interview: Update on HMRC's Profit Diversion Compliance Facility

Paul Sutton

Many thanks to Ken Almand for sharing his insights and updates on HMRC’s Profit Diversion Compliance Facility (PDCF), including his commentary on HMRC’s webinar last week. Questions we discussed included: * Did HMRC’s webinar on 6th October tell us anything new? * What have we learned from our experiences with the PDCF so far? In which situations […]

Interviews

Intercompany Agreements

Winners: Excellence in International Legal Services

Paul Sutton

My colleagues and I were humbled that our firm was shortlisted for the Law Society’s 2020 Excellence Awards, alongside firms like Baker McKenzie, Dentons, King & Spalding, Reed Smith, Societe Generale and Travers Smith. We were even more humbled that we actually won last week, in the category of ‘Excellence in International Services’. A result […]

LCN Updates

Intercompany Agreements

Preparing for Transfer Pricing Audits: Bayer’s Battle with the Canadian Revenue Agency

Paul Sutton

The following article is part of a series of case studies and articles which have been kindly contributed by Dr Harold McClure, a New-York based economist who has advised in the area of transfer pricing for many years. Action 13 of the Base Erosion and Profit Shifting project requires large multinationals to prepare a Master […]

Intercompany Agreements

Building something that stands up

Paul Sutton

Apparently, the IRS believes that the quality of transfer pricing documentation may have declined. (See its FAQ guidance issued in April this year.) They believed it necessary to remind practitioners that TP documentation needs to be consistent with risk allocation in intercompany agreements. Isn’t that like having to remind a glazier that the glass has […]

Intercompany Agreements

Where's your allotment?

Paul Sutton

Allotment (noun) a plot of land rented by an individual for growing vegetables or flowers. In my ignorance, I thought that allotments were something quintessentially British. But it turns out that it’s a phenomenon that exists all over the world. The one pictured above is in the village of Lindfield, West Sussex, where we live. […]

Intercompany Agreements

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