A strict “one-way street� approach may be unnecessary in light of major developments in the international tax landscape and the UK.
While UK transfer pricing rules generally align with the international approach endorsed by the OECD, some of the UK rules  have been criticized for being too rigid and complex. One particular challenge is the so-called “one-way street� (OWS) rule, which requires an arm’s-length tax return adjustment that increases taxable profits (or reduces allowable losses), but generally does not permit a tax return adjustment in the other direction for cross-border transactions unless this has been pre-authorized by HM Revenue & Customs (HMRC) through an advance pricing agreement or after the conclusion of a mutual agreement procedure (MAP).
Read a December 2024 article* prepared by ÀÖÓ㣨Leyu£©ÌåÓý¹ÙÍø LLP tax professionals that suggests that a strict OWS approach may be unnecessary in light of major developments in the international tax landscape and the UK and other jurisdictions would be better served by providing greater flexibility for taxpayers to make self-initiated downward adjustments.
* This article originally appeared in Tax Notes International (December 16, 2024) and is provided with permission.