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Intercompany Agreements

Tax Journal Article on HMRC v BlackRock

22 October 2022   Paul Sutton

BlackRock: no imputation of covenants for transfer pricing purposes For the September 2022 issue of the Tax Journal, I wrote an article on the Upper Tribunal’s decision in HMRC v BlackRock Holdco 5 LLC. The Upper Tribunal allowed HMRC’s appeal, holding that the First-tier Tribunal had erred in law when it allowed covenants to be…

Intercompany Agreements

How we healthcheck intercompany agreements for TP compliance

17 October 2022   Paul Sutton

  When we’re reviewing intercompany agreements, we look at four key areas of alignment with TP policies: the delineation of the transaction, the risk allocation, the treatment of IP and intangibles, and the pricing. We also look at a fifth area, namely general fitness for purposes. This includes obvious things such as whether the parties…

LCN Updates

Group Reorganisations

Intercompany Agreements

Top 10 ‘hidden assets’ which can be missed in Global Value Chain restructuring or legal entity reduction projects

17 October 2022   Paul Sutton

Corporate groups tend to acquire more and more legal entities over time – whether as a result of M&A activity, SPVs created for specific projects or (in some cases) tax planning. Most groups therefore need to clear out unnecessary entities from time to time. Some larger groups have in excess of 1,000 legal entities, and…

LCN Updates

Group Reorganisations

Intercompany Agreements

Exclusive Distribution Rights: approach with caution

21 September 2022   Paul Sutton

As businesses expand across borders, the granting of exclusive distribution rights (EDRs) between associated companies may be considered as a tool to manage market access, brand control, and—critically—transfer pricing (TP) and customs outcomes. But while EDRs can serve legitimate commercial and fiscal purposes, they carry risks that demand careful scrutiny. What Are Exclusive Distribution Rights?…

Intercompany Agreements

Lead contractor / subcontractor arrangements in transfer pricing

21 September 2022   Paul Sutton

This is a very common structure for multinational businesses which provide advisory services (such as management consultants, marketing services providers, PR agencies, engineering consultants, architects etc). And also for software providers, if they also provide software implementation assistance and charge for that separately. In this kind of scenario, the group entity which acts as ‘lead…

Intercompany Agreements

11 warning signs that the legal implementation of your TP policies may not be up to scratch

21 September 2022   Paul Sutton

Spending time and money on TP policies and TP documentation, but not finishing the job and implementing them with appropriate intercompany agreements, is a bit like buying a Tesla Cybertruck and then fitting tyres which are old and bald. You’re leaving it to chance as to whether you’ll get the outcome you want in a…

Intercompany Agreements

Legal Implementation of Profit Splits in Transfer Pricing: Actual Profits vs Anticipated Profits

21 September 2022   Paul Sutton

Some TP methods imply a drafting approach for pricing clauses in the intercompany agreements needed to implement them. An obvious example would be cost plus arrangements. Other TP methods do not necessarily imply a particular structure for pricing clauses. The transactional profit split method falls squarely within the second category. One of the reasons is…

Intercompany Agreements

What are legal ‘anchor points’?

21 September 2022   Paul Sutton

Before you can create a TP policy, you need to identify your ‘anchor points’. Too often we see TP reports which have clearly not even attempted to understand the legal structure of the groups they are describing – such as which entities act as resellers or licensors, as opposed to internal service providers. Here’s why…

Intercompany Agreements
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