Engagements › Helios Lane Software › Year-End True-Ups
Year-End True-Ups
Each tested party against its contract and the range: whether an adjustment is suggested, how much, and how it is booked. The suggestion is always to the contract, never below it. The 2025 books are closed, so an adjustment for 2025 goes into the return; for 2026, the same check before 31 December lets an invoice or credit note fix it — to be confirmed by the practice.
Before the books close: each tested party against its target, with the invoice and journal.
2026, In The Year — while an invoice can still fix it
| Transaction | So Far | Range (2025) | Contract | Before 31 December |
|---|---|---|---|---|
| Contract software development Management accounts to 30 September 2026 (invented) | 11.20% | 7.30% to 9.18% | 10.00% | €122,400 down Suggestion Credit note from Helios Lane Development Ltd, €122,400 to the contract, 10.00%, on a forecast base of €10,200,000. To the contract, 10.00%: above the range — the counterparty's tax authority may disallow the excess; the policy is to review (suggestion). Booked before the year end, the credit note is in the accounts. After they close, No downward adjustment is drafted: the arm's length rule provides for profit to be added (ITL s.33(1), a reading), and for persons within Circular 6/2023's simplification measures the Tax Department says it will not adjust downwards (Circular 6/2023 ¶7δ); for a company over the Local File threshold that is to be confirmed by the practice — save the corresponding deduction for a Cyprus counterparty when the Commissioner raises the other side (ITL s.33(5)), or relief through a treaty's mutual agreement procedure after an increase abroad (OECD 4.32). An adjustment made only in the return is a compensating adjustment most countries do not recognise (OECD 4.38–4.39). |
Against last year's range until this year's study is refreshed; the forecast base and the year-to-date result come from the client's management accounts. The written agreement is the starting point (OECD 1.42).
Amounts are computed on unrounded margins; the percentages shown are rounded to two decimals, so a figure may differ slightly from one worked out from them.
2025, The Year Closed
Contract software development
No adjustment suggested| Working | Value | Source |
|---|---|---|
| Tested party | Helios Lane Development Ltd | |
| Target in the agreement or policy | 10.00% | |
| Earned | 8.70% | |
| The range | 7.30% to 9.18% | The target itself is outside it |
| Base | €9,751,000 | Trial balance: costs of Development Ltd (Trial balance, Development Ltd) |
8.70% is within the range, so no transfer pricing adjustment is required (OECD 3.57, 3.60; suggestion); but the agreement says 10.00% and the provider has invoiced €126,763 less than its own contract — invoice to the contract, or amend the agreement to the range: for the practice to decide. The written agreement is the starting point (OECD 1.42).
Amounts are computed on unrounded margins; the percentages shown are rounded to two decimals, so a figure may differ slightly from one worked out from them.
Priced By A Rate, No Study
- Licence of the platform software: €3,000,000, 5.00% — Group transfer pricing policy §4: royalty of 5% of net sales. No study — rate to be evidenced Licence-agreement search not yet run.
No true-up is drafted without a study: a rate alone does not show what is arm's length.