Refinitiv Limited & Ors, R (on the application of) v The Commissioners for HMRC

An advance pricing agreement binds the parties only for the chargeable periods and matters for which it makes provision. Under section 220 of the Taxation (International and Other Provisions) Act 2010, a later accounting period is not brought within an agreement merely because earlier transactions affect the later calculation.

Once the agreed term expires without renewal, the methodology has no indefinite afterlife and does not constrain a later diverted profits tax charge. Contractual references to the agreement’s duration, currency and covered years ordinarily track the specified term. Any broader public-law consequence of inconsistency between a later notice and a prior agreement remains fact-sensitive.

Three UK-resident companies in the Thomson Reuters group supplied intellectual-property-related services to a Swiss group company. An advance pricing agreement made with HMRC covered specified transactions and accounting periods from 1 October 2008 to 31 December 2014, using mainly a cost-plus methodology.

For 2018, HMRC issued diverted profits tax charging notices calculated on a profit-split basis. The companies argued that the notices were unlawful because they conflicted with the agreement. The Upper Tribunal dismissed the judicial review claim: [2023] UKUT 00257 (TCC). The appeal concerned whether the 2018 accounting period was one to which the agreement related under section 220 of the Taxation (International and Other Provisions) Act 2010, and whether the agreement constrained HMRC’s 2018 notices.

1. Appeal dismissed. The Court of Appeal upheld the Upper Tribunal’s dismissal of the judicial review claim.
2. Whether a chargeable period is one to which an advance pricing agreement relates under section 220(1) of the Taxation (International and Other Provisions) Act 2010 is determined by examining the terms of the particular agreement. In the context of annual corporation tax, the relevant periods are those for which the agreement makes provision concerning the matters identified in section 218(2).
3. The agreement covered the specified five-year term and its rollback period. It did not relate to the unspecified 2018 accounting period merely because services supplied during the earlier period contributed to profits realised in 2018. The approach in R (Veolia ES Nottinghamshire Ltd) v Nottinghamshire County Council, [2010] EWCA Civ 1214, [2012] PTSR 185, concerned a materially different statutory context and provided no assistance.
4. The references in clause 3 to the agreement’s duration, currency and covered years naturally referred to the term in clause 9. Clause 3.2 prevented HMRC from making alternative transfer-pricing adjustments during that term. It did not give the agreed methodology an indefinite effect in later accounting periods or constrain later diverted profits tax charges.
5. The court proceeded on HMRC’s concession that inconsistency between a notice and the agreement would, on these facts, establish the public-law challenge. It expressly declined to endorse the proposition that such inconsistency would always invalidate a later notice in different circumstances.

• Court of Appeal (Civil Division): Appeal dismissed.
• Upper Tribunal (Tax and Chancery Chamber): Judicial review claim dismissed in [2023] UKUT 00257 (TCC).
• High Court, Administrative Court: Foster J granted permission for the judicial review claim to proceed and it was later transferred to the Upper Tribunal.