UK: Transfer Pricing and Private Equity - Guidance Issued

Last Updated: 5 October 2005
Article by Catherine Robins

Originally published September 2005

The March 2005 announcement that the transfer pricing legislation would be widened to catch more private equity transactions has caused concern and uncertainty in the private equity industry. The legislation was finally enacted in July in the post-election Finance Act and HM Revenue & Customs have now issued some draft guidance on the practical application of the new rules.

The guidance essentially confirms that on a typical private equity transaction:

  • transfer pricing will not generally be an issue in relation to most bank lending, including mezzanine finance with equity warrants;
  • transfer pricing will usually be an issue in relation to most of the debt from private equity houses; and