Article 51 - Compensating Adjustment Claims

(1) If—
(a) in an Accounting Period and by reason of the actual conditions, an amount of Chargeable Profits of that other PersonAssociated with the first taxpayer, in this Part referred to as the "second taxpayer", is increased;
(b) that increase in Chargeable Profits corresponds to the reduction in Chargeable Profits of the first taxpayer referred to in Article 48(1)(b); and
(c) a claim under this Article for a compensating adjustment has been made in writing by the second taxpayer to the Tax Department,
the second taxpayer's Chargeable Profits shall be computed as if the arm's length conditions had been made or imposed instead of the actual conditions, and the computation must be consistent with the computation made on that basis in the case of the first taxpayer.
(2) Article 51(1) shall not apply unless the amount of Chargeable Profits mentioned in Article 51(1)(a) would be taken into account in computing the amount of the second taxpayer's Chargeable Profits for an Accounting Period.
(3) For the purposes of Article 51(2) in a case where no tax loss accrues or a smaller loss accrues, as mentioned in Article 48(4)(b), a Chargeable Profit shall instead be deemed to have accrued.
(4) A claim by the second taxpayer under Article 51(1) shall not be made in relation to an Accounting Period unless—
(a) the first taxpayer had made a return on an arm's length basis for the Accounting Period; or
(b) a relevant notice given to the first taxpayer takes into account a determination in accordance with this Part of an amount falling to be brought into account for tax purposes on that basis for that Accounting Period; and
(c) the claim is made within 3 years of the date on which that return is made or that notice is given, or such longer time as the Tax Department may allow.
(5) Where—
(a) a claim under Article 51(1) is made by the second taxpayer in relation to a return made on the arm's length basis as is mentioned in Article 51(4)(a); and
(b) a relevant notice taking account of such a determination as is mentioned in Article 51(4)(b) is subsequently given to the first taxpayer,
the second taxpayer shall be entitled, within the period mentioned in Article 51(4)(c), to make any such amendment of the claim as may be appropriate in consequence of the determination contained in that notice.
Amended (as from 18th June 2014)