Glaxo Group Ltd and Others v Commissioners of Inland Revenue
| Jurisdiction | England & Wales |
| Court | Chancery Division |
| Judgment Date | 09 November 1995 |
| Date | 09 November 1995 |
Chancery Division
Before Mr Justice Robert Walker
Corporation tax - transactions between associated persons - adjustment by amending existing open assessment
Following a transfer pricing enquiry, a direction given by the Board of Inland Revenue under the provisions of section 485 of the Income and Corporation Taxes Act 1970, on transactions between associated persons, any tax adjustments necessary to give effect to such direction could be made by amending an existing open assessment to corporation tax.
The statutory provisions did not restrict adjustments being made by a new assessment raised after the relevant direction had been given and within the usual six-year time limit.
Mr Justice Robert Walker so held in the Chancery Division when refusing to make declarations sought by an originating summons issued by three wholly owned subsidiaries of Glaxo Wellcome plc that section 485 could not apply unless there had been a direction by the Board of Inland Revenue and thereafter an assessment within the appropriate time limit.
Section 485(1) of the 1970 Act contained provisions for sales at undervalue between associated persons in different countries to be treated for tax purposes as a transaction at a price that the property would have fetched had the transaction been between independent persons dealing at arms' length.
Section 485(2) covered the converse case of sale at an overvalue.
Section 485(3) provides: "The preceding provisions of this section shall not apply in relation to any sale unless the Board so direct, and where such a direction is given all...
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