New guidelines have been issued for UK businesses which fall within the scope of UK transfer pricing (GfC7) rules. The guidelines do not change UK law, but explain, comprehensively and in detail, where HMRC perceives transfer pricing gives rise to a risk of UK companies not being tax compliant. The guidelines also describe the processes HMRC expects UK companies to adopt to minimise the risk of non-compliance.
These guidelines and examples are designed to clarify and help companies understand HMRC’s expectations and set out what HMRC considers best practice in compliance and higher risk approaches.
UK transfer pricing compliance risk is a key concern of finance and risk functions within businesses, and their advisers or in-house tax teams. These guidelines are tailored to the different needs of different audiences. This is reflected in the following parts:
Managing compliance risk for UK businesses (part 1) should be read by those managing UK transfer pricing risk to:
- determine the scope of work
- build governance, controls and checks
- evidence the arm’s length return.
Common compliance risks (part 2) is for specialists and includes:
- indicators of higher risk through the compliance process
- HMRC recommendations for best practice compliance approaches
- how to support and evidence an arm’s length return.
Indicators of transfer pricing policy design risk (part 3) — for specialists and covers common risks in transfer pricing design and implementation.
Annex A also provides helpful examples of supporting records and information required by HMRC.
Read the full guidance.