Unrelated party: Difference between revisions
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imported>Doug Williamson (Create the page. Sources: FRS 8 page, ACT CertFin CT 3.1.1 Tax systems, page 11.) |
imported>Doug Williamson (Add example and link with Arm's length principle concept and page.) |
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Unrelated parties are companies or other entities which are independent. | The concept of related and unrelated parties arises in the context of the arm's length principle. | ||
Under the arm's length principle, transactions between related parties are conducted and priced as if they were unrelated, so that there is no question of either: | |||
* A conflict of interest, or | |||
* Tax avoidance. | |||
Unrelated parties are companies or other entities which are independent of each other, so that they are normally assumed to be dealing with each other at fair market prices. | |||
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*[[FRS 8]] | *[[FRS 8]] | ||
*[[Transfer pricing]] | *[[Transfer pricing]] | ||
*[[Arm's length principle]] | |||
*[[Related party]] | *[[Related party]] | ||
Revision as of 12:07, 30 May 2015
The concept of related and unrelated parties arises in the context of the arm's length principle.
Under the arm's length principle, transactions between related parties are conducted and priced as if they were unrelated, so that there is no question of either:
- A conflict of interest, or
- Tax avoidance.
Unrelated parties are companies or other entities which are independent of each other, so that they are normally assumed to be dealing with each other at fair market prices.
