Anglo-Swedish drug giant AstraZeneca has upped its earnings forecast for 2010 after a long-running dispute with HM Revenue & Customs (HMRC) in the UK was finally laid to rest.

The drugmaker’s stock was given a small boost after it agreed to pay £505 million to resolve all claims made by HMRC regarding “complex” transfer pricing issues running over a 15-year period to 2010, of which £350 million will be paid in March this year and £155 million a year later.

Transfer pricing relates to the movement of assets such as patents or services to foreign subsidiaries based in countries with more favourable tax rules, a practice widely used by multinational companies to save cash. While organisations can benefit significantly from this practice, they are operating outside the law if found guilty of charging artificial prices for whatever assets they are moving around internally to secure more favourable tax bills.

AstraZeneca had been banking money to prepare for the outcome of the dispute, which has taken many years to resolve, but as the matter – along with other UK tax issues – has now been settled, part of this provision will be diverted into earnings for the current year, it said.

As a result, the group has lifted its forecast for 2010 core earnings per share from $5.75-$6.15 to $5.90-$6.30 to also reflect a lower tax rate, which is expected to be around two percentage points under earlier guidance.

The settlement also means that AZ will not have to fight its corner in the UK Tax Court, as previously scheduled for later this year.