Advanced Thin Cap Agreement

The ATCA is a legally binding agreement between HMRC and the taxable person on the tax treatment of the financing provision and, as such, CTSA returns that do not meet the conditions of the ATCA may subject the taxable person to tax penalties. It is up to the taxpayer to turn to HMRC to apply for an ATCA. The first contact must clearly contain a statement that the agreement is covered by HMRC`s S218 TIOPA 2010 (formerly S85 FA99). The application should contain information on the company seeking the agreement and the wider group to which it belongs, as well as on the context of the business and the sector, as well as on a financial model including expected profits and cash generation for a specified period. HMRC also implemented monitoring and compliance measures as soon as an advance pricing agreement was successfully implemented. Unilateral, bilateral and multilateral pre-agreement agreements as well as pre-contractual capitalization agreements are available. Since 2007, it has been possible to conclude, under APA legislation, prior small-cap agreements (ATCAs) (see ยง774-895). It should be noted, however, that ATCAs and SAAs are based on the same legal provisions, but there are separate processes to ensure an agreement. RMC guidelines for the ATCA completion process are contained in Practice Statement SP1/2012 (which largely replaced SP4/2007 to update legislative references). A standard agreement can be found on HMRC`s website under www.hmrc.gov.uk/cnr/draft-atca-v1.pdf. Meeting the requirements of the UK Thin Cap scheme is a complex challenge and the introduction of the ATCA programme was an important step in putting in place a framework to remove much of this uncertainty. . .

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