INTM435080 - Transfer pricing: tax cases - Waterloo Plc and others v CIR (SpC301)

The case concerned loans to a trustee by a parent company to enable the trustee to purchase shares and grant share options to employees of subsidiary companies. The point at issue was whether or not the loans were brought within ICTA88/S770 by virtue of ICTA88/S773(4). But the case has wider significance because it takes transfer pricing law beyond the level of the simple transaction entered into by two parties.

The Special Commissioners determined that the business facilities comprised several elements involving a number of different parties. Because of the need to make “the necessary adaptations” it did not matter that the business facilities had been given and received (by way of a complex provision) rather than being sold and bought (by way of a straightforward transaction).

The case is discussed in greater detail with reference to ICTA88/S773(4) at INTM436070.

It is also an important decision in the context of the transfer pricing of share options. For further guidance see INTM464140.