Drag the correct phrase into each gap (1) …… to (5) …… .
at arm's length for transfer pricing purposes
grossed up so that the net amount received is unchanged
subject to withholding tax at the applicable treaty rate
treated as an allowable deduction for corporation tax purposes
relieved under an applicable double taxation agreement
subject to stamp duty land tax irrespective of consideration
aggregated with the shareholder's other chargeable gains
Explanation of ALL phrases (correct + distractors)
at arm's length for transfer pricing purposes (USED in (1))
— Standard tax-law phrase: related-party prices must be set as if the parties were independent (“at arm's length”) to avoid hidden profit shifting.
— Fits sentence (1) because intra-group management fees are a classic transfer-pricing risk.
subject to withholding tax at the applicable treaty rate (USED in (2))
— Refers to tax withheld at source (for example, on cross-border dividends, interest, royalties), with the rate often reduced by a double tax treaty.
— Fits sentence (2) because dividends to non-residents are normally exposed to WHT, sometimes at a treaty-reduced rate.
treated as an allowable deduction for corporation tax purposes (USED in (3))
— Means the expense can be deducted when calculating taxable profits, reducing the corporation tax base.
— Fits sentence (3) because interest may or may not be deductible, depending on rules (beneficial ownership, anti-avoidance, reporting obligations).
grossed up so that the net amount received is unchanged (USED in (4))
— In a gross-up clause, the payer increases the gross payment so that, after withholding tax, the recipient still receives the same net amount as originally agreed.
— Fits sentence (4) dealing with gross-up when law requires withholding or deduction.
relieved under an applicable double taxation agreement (USED in (5))
— Refers to double tax treaty relief, typically by foreign tax credit or exemption to avoid the same income being taxed twice.
— Fits sentence (5) because foreign-source income that has already suffered tax is a typical DTA scenario.
Distractor phrases (not used in any gap)
subject to stamp duty land tax irrespective of consideration (DISTRACTOR)
— Refers to UK Stamp Duty Land Tax (SDLT), a transaction tax on land interests; “irrespective of consideration” is a deliberate exaggeration and not a standard formula.
— Does not fit any sentence: the section is about management fees, dividends, interest and treaty relief, not about land transactions.
aggregated with the shareholder's other chargeable gains (DISTRACTOR)
— Refers to capital gains tax treatment: individual gains can be combined (“aggregated”) to calculate net chargeable gains.
— Does not fit any gap: the sentences focus on income (fees, dividends, interest) rather than capital gains, so the collocation would be contextually wrong.
Mini-glossary (Tax code context)
withholding tax (WHT)
Tax deducted at source by the payer (for example, a bank or company) when making certain payments to non-residents.
arm's length
The standard for pricing transactions between related parties, treating them as if they were independent and dealing on normal commercial terms.
allowable deduction
An expense that tax law permits to be deducted when calculating taxable profit.
gross-up clause
Contractual clause under which the payer increases the gross amount of a payment if tax must be withheld, so the payee receives the same net amount.
double taxation agreement (DTA)
A treaty between two states that allocates taxing rights and provides mechanisms (exemption or credit) to avoid double taxation of the same income.