The walls are crumbling

Edward Hellier considers the case of Union Castle, and its impact on transfer pricing and equity transactions

The traditional approach to transfer pricing has been that it does not apply to equity transactions, such as the payment of a dividend or the issue of bonus shares. However, the recent decisions of the Upper Tribunal and Court of Appeal in the Union Castle case have challenged that conventional wisdom (see Union Castle Mail Steamship Company v HMRC [2018] UKUT 316 (TCC) ('Union Castle UT') and Union Castle Mail Steamship Company Ltd and others v HMRC [2020] EWCA Civ 547 ('Union Castle CoA')).