835H Elimination of double counting.

(1) Where—

(a) the profits or gains or losses of a person (in this section referred to as the “first-mentioned person” ), that are chargeable to tax under Schedule D, are, by virtue of section 835C, computed as if, instead of the actual consideration payable or receivable under the terms of an arrangement, the arm’s length amount in relation to that arrangement were payable or receivable as the case may be, and

(b) the other party (in this section referred to as the “affected person” ) to the arrangement is within the charge to tax under Schedule D in respect of the profits or gains or losses arising from the relevant activities,

then, subject to subsections (2) and (3), on the making of a claim by the affected person, the profits or gains or losses of the affected person arising from the relevant activities that are chargeable to tax under Schedule D shall be computed as if, instead of the actual consideration receivable or payable by the affected person under the terms of the

arrangement, the arm’s length amount (determined in accordance with section 835C) in relation to that arrangement were receivable or payable, as the case may be.

(2) (a) Subsection (1) shall not affect the credits to be brought into account by the affected person in respect of closing trading stocks, for any chargeable period.

(b) For the purposes of this subsection “trading stock” , in relation to a trade, has the same meaning as it has for the purposes of section 89.

(3) Subsection (1) shall not apply in relation to an arrangement unless and until any tax due and payable by the first-mentioned person for the chargeable period, in respect of which the profits or gains or losses are, by virtue of section 835C, computed as if, instead of the actual consideration payable or receivable under the terms of an arrangement, the arm’s length amount in relation to that arrangement were payable or receivable, as the case may be, has been paid.

(4) Where the profits or gains of an affected person are reduced by virtue of subsection (1) then the amount of foreign tax (if any) for which relief may be given under any double taxation relief arrangements or paragraph 9DA or 9FA of Schedule 24 shall be reduced by the amount of foreign tax which would not be or have become payable if, for the purposes of that tax, instead of the actual consideration payable or receivable under the terms of any arrangement to which subsection (1) applies, the arm’s length amount (determined in accordance with section 835C) in relation to that arrangement were payable or receivable by the affected person as the case may be.

(5) (a) Where, in relation to an arrangement—

(i) the persons, who apart from this paragraph would be the affected person and the first-mentioned person, are members of the same group,

(ii) the arrangement is comprised of activities within the meaning of paragraph (a) of the definition of “excepted operations” in section 21A, and

(iii) the persons referred to in subparagraph (i) jointly elect that this section shall apply,

then section 835C and this section shall not apply in relation to that arrangement.

(b) An election under paragraph (a)(iii) shall be made by notice in writing to the Revenue officer on or before the specified return date for the chargeable period (within the meaning of section 959A) for the chargeable period of the person who, apart from paragraph (a), would be the first-mentioned person, and the notice shall set out the facts necessary to show that the persons referred to in paragraph (a)(i) are entitled to make the election.

(6) Any adjustments required to be made by virtue of this section may be made by the making of, or the amendment of, an assessment.