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APPLYING CREDIT RISK PRACTICES (Credit ratings agencies (Issuers also use…

- - - - A taxpaying UK business has a commercial relationship with a related party with a low marginal tax rate and receives income from that other business that appears to be small by reference to that relationship, or makes payments to that business that appear to be large by reference to that relationship.
      -  A loss-making UK business has a commercial relationship with a related party with a higher marginal tax rate and the loss appears to be the result of payments to that business.
      -  A UK business, whether taxpaying or loss making, has a commercial relationship with a related party and there are non-tax factors that might provide an incentive for manipulation, such as regulatory requirements involving customs valuations, anti-dumping duties, currency exchange or price controls, or cash flow incentives within a group affecting where profit is reported or how dividends are financed.
      -  A UK company that is a member of a group enters into a cost-sharing arrangement with other group members with no clear expectation of a future income stream commensurate with its obligation to share costs.
      -  A UK company that is a member of a group has acquired, created or enhanced an asset that is used by other group members, perhaps by incurring expenditure on research and development leading to the creation or enhancement of intellectual property.
    - -  A UK business has transactions with a related party with a marginal tax rate equivalent to, or more especially greater than, its own.
      -  A UK business has a low marginal tax rate and the disallowance of a cost, or the attribution of income, as the result of a transfer pricing adjustment would not be immediately effective for tax purposes.
      -  A UK business enters into transactions with unrelated parties on similar terms to those it enters into in equivalent transactions with related parties.
      -  A UK company is a member of a group within which there are significant minority shareholders whose interests would be prejudiced by the diversion of profits to a majority shareholder.