INTM573060 - Thin capitalisation: the Advance Thin Capitalisation Agreement: How ATCAs are dealt with within HMRC

There have been a number of structural changes since this guidance was last revised, some of them quite recent.

Much of the financial transfer pricing work done by HMRC was previously carried out directly by the two teams of financial specialists which now form part of the Transfer Pricing Team within Business International. These thin cap and financial specialists have largely moved away from being “case owners” and towards providing advice and support to work done by specialists and case owners who are mainly located within Local Compliance and the Large Business Service. The Transfer Pricing Team now spends more time on policy, litigation, training and guidance. A network of specialists was put in place with the establishment of International Issues Managers within Local Compliance and the Large Business Service, and this was greatly expanded with the setting up of the Transfer Pricing Group, established in April 2008 in the wake of the Review of Links with Business.

The Transfer Pricing Team at Business International is responsible for the ATCA regime, with responsibilities divided for private equity and more traditional cases. The team also looks after the 2005 legislation against avoidance through arbitrage, broader transfer pricing issues relating to financial businesses, and has some oversight regarding the cross-border application of CTA09/S441 (formerly FA96/SCH9/PARA13), although responsibility for the latter now falls to the Anti-Avoidance Group, adding this to its existing role of looking after the domestic application of s441.

Very few ATCA applications are retained by the team (or referred back to them for their sole attention). The applications are forwarded to the Transfer Pricing Specialist teams in Local Compliance or the Large Business Service, or to the International Issues Managers, where the applications are either worked by them or with their input and supervision.

There should be easy access for consultation and input up and down the line.

When the Transfer Pricing Team at Business International does become involved in specific applications or enquiries, it is likely to be:

• In a one-off advisory capacity, or as a contributor towards the Local Compliance or LBS team effort
• Where the caseworker is faced with situations or arguments which are novel or outside their experience or that of more immediate colleagues
• Where the size and complexity of the case warrants such involvement
• Where certain issues arise which the Transfer Pricing Team wishes to be involved in or handle directly (see INTM57035)
• Where the case appears to be moving towards litigation
• Where there appears to be some kind of stalemate or deadlock