EXPLANATORY NOTE

1. This clause provides relief from double counting where an advance pricing agreement under clause 76 is applied. Where a transaction takes place between a taxpayer who is a party to such an agreement and another person, and the price of that transaction is established by the agreement, the other person can claim to use the same price.

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2. Subsection (1) says that the section applies where an advance pricing agreement establishes the price to be taken into account for tax purposes of a transaction between the taxpayer in question and another party.

3. Subsection (2) allows the other party to use for tax purposes the price established in accordance with the advance pricing agreement. It does so by applying paragraphs 6 and 7 of Schedule 28AA to the Taxes Act 1988 on the assumption that the pricing arrangements set out in the advance pricing agreement apply to that other party.

4. Subsection (3) ensures that the rule is applied consistently as between the party to the advance pricing agreement and the other party.

5. Subsection (4) says that the application of subsection (2) is subject to the terms of the advance pricing agreement between the first party and the Inland Revenue.