Transfer Pricing
Resources for Great Britain
Government Links
UK Transfer
Pricing Regulations
HMRC Tax
Bulletins on Transfer Pricing
News and Other Resources
Government Links
Her Majesty's
Revenue and Customs (HMRC) Homepage
HMRC's International Transfer Pricing Page
HMRC's Transfer Pricing and Corporation Tax Self Assessment Page
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UK Transfer Pricing
Regulations
1998 Finance Act
Section 108 introduces a comprehensive modernization of the
UK’s transfer pricing legislation.
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HMRC Tax Bulletins on
Transfer Pricing
Transfer Pricing and the Arbitration Convention
The Convention provides for independent arbitration to ensure
the elimination of double taxation by EU Member States which could arise
from a transfer pricing adjustment made by a Member State. Guidance about
how the Convention works was provided in
Tax Bulletin, Issue 31, October 1997.
Released August 1998
Transfer Pricing Legislation
The 1998 Finance Act (FA 98) introduced a comprehensive
modernization of the UK’s transfer pricing legislation. Under the transfer
pricing legislation, taxpayers are required to recognize the arm’s length
principle in reporting income, profits or losses for tax purposes.
Released October 1998
Penalties and the Transfer Pricing Legislation
Bulletin details penalties under the UK's transfer pricing
legislation.
Released December 1998
Advance Pricing Agreements
This guidance about the procedures relating to bilateral
Advance Pricing Agreements draws on the experiences and observations of the
Inland Revenue in concluding APAs with its treaty partners under the
authority of the Mutual Agreement Procedure of Double Tax Treaties.
Released October 1999
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News and Other Resources
Landmark
Case: Special Commissioners Determine that DSG Retail Breached Transfer
Pricing Rules
This is the
first major transfer pricing case in the UK to provide guidance on how the
HMRC and UK courts will select transfer pricing methods and identify
qualified comparables. DSG’s expert witness had argued for use of the CUP
method and provided several comparables to support its selection. The HMRC
rejected the comparables for several reasons, which are detailed in the
above link. HMRC’s expert witness performed a profit split since it was
determined no comparables could be identified under the CUP method. The
court decided in favor of the profit split method, but deferred on the issue
of how the calculation should be performed. The method selection is
significant because under the OECD Guidelines, transactional methods (such
as the CUP method employed by the taxpayer) are preferred to profit-based
methods (such as the profit split approach employed by the HMRC). The HMRC
appears to view the profit split method as an adaptable selection that takes
into account unique conditions of a tested transaction. This decision
provides information to taxpayers and practitioners on the types of
arguments that the HMRC is likely to make on questions of comparables and
methodology.
April 23, 2009
Finance Bill 2009: Loan Relationships, Derivative Contracts and
Interest
Amended version of
the draft legislation on changes to the loan relationships rules
for connected companies relating to late payments of interest,
and releases of trade debts. The HMRC published
draft legislation in December 2008 for consultation. The
proposal amended the late-interest rule and the similar
equivalent rule on deeply discounted securities in the rewritten
Corporation Tax Act, which is due to come into effect on April
1, 2009.
March 19, 2009
Tax
Law Rewrite News Release - UK Clarifies Transfer Pricing Rules
The Taxation (International and Other Provisions) Bill
includes provisions about double taxation relief, transfer pricing, advance
pricing agreements and tax arbitrage. It also relocates and where
appropriate rewrites some provisions which would otherwise have been left
unhelpfully in the Income and Corporation Taxes Act or one of the Finance
Acts. Copies of the draft Bills, like all the Tax Law Rewrite project
publications, can be obtained free of charge from Jackie Bartlett, (address
above) or are also available on the Internet at
www.hmrc.gov.uk/rewrite
March 3, 2009
Advance Thin Capitalisation Agreements - Frequently Asked Questions
The UK has created a Business International Directorate with HMRC to address
international tax issues, including certain transfer pricing issues.
Those issues include thin capitalisation, financial services transfer
pricing and attribution of profits; and the Investment Manager Exemption
under Schedule 9 of Finance Act 1996. This brief also addresses
questions about advance thin capitalisation agreements that have arisen
since ATCAs were introduced.
January 12, 2009
Thin Capitalisation: Practical Guidance
The main aim of this module is to provide some practical
guidance on working thin capitalisation cases. Using the information
provided, in conjunction with the acquisition of expertise over a period of
time, should enable caseworkers to work most cases to a conclusion.
January 2009
Finance Bill 2009: Draft Legislation Amending the Corporation Tax Rules on
Late-Paid Interest Between Connected Companies
The HMRC had earlier released a Consultation Document
concerning the rule in paragraph 2 of Schedule 9 to Finance Act 1996 which
applies in a number of situations where interest payable by a debtor company
to a connected person remains unpaid 12 months after the end of the
accounting period, and corresponding amounts are not brought into account
for tax purposes under the rules on ‘loan relationships’. In such a case,
the interest is deductible for tax purposes when it is paid, rather than
when shown in accounts drawn up in accordance with generally accepted
accounting practice, as is normally the case under the loan relationships
rules. Views were invited on options for amending the rule in cases where
the debtor and creditor companies are ‘connected’ (broadly, under common
control. This document provides the responses to the Consultation
Document and the draft legislation.
December 11, 2008
Loan
Relationships: Draft Legislation on Release of Trade Debts
Comments are invited by January 16, 2009 on changes to the
releases of trade debts.
December 11, 2008
Reform of
Loan Rules for Connected Companies
The HMRC is to introduce corporate tax legislation that
amends the loan relationships rules affecting connected companies. The new
rules will apply to the release of trade debts owed between connected
companies. The change will also amend the rules on the late payment of
interest between connected companies.
November 24, 2008
House of Commons
Committee of Public Accounts – Management of Large Business Corporation Tax
– Thirtieth Report of Session 2007-08
This report discusses the latest actions taken to contest
apparent tax avoidance, which includes legislation to force disclosure of
tax avoidance plans, application of transfer pricing rules to cross-border
intangible transfers, the introduction of the risk-based approach, and use
of the tax penalty regime.
October 21, 2008
Netherlands - U.K. Tax Treaty
The Netherlands and the United Kingdom signed an income tax
treaty that will provide for arbitration of competent authority disputes
when the accord enters into.
September 26, 2008
HMRC Issues Updated Guidance Regarding the Conduct of Transfer Pricing
Enquiries
This guidance outlines the practices and procedures HMRC has
adopted for transfer pricing enquiries in order to achieve the aims of
Proposal 5 of the 2006 Review of Links with Large Business. These were
greater certainty; an efficient risk based approach to dealing with tax
matters; speedy resolution of issues; and clarity through effective
consultation and dialogue.
June 10, 2008
Draft Statutory Instrument, The Transfer of Tribunal Functions and Revenue
and Customs Appeals Order 2008
The UK is creating a new tribunal to hear taxpayer appeals
from HMRC notices of inquiry, including those in transfer pricing cases.
Such appeals were previously heard by the Special Commissioners.
June 2, 2008
U.K. Parliament's Select Committee on Public Accounts 30th Report,
Management of Large Business Corporation Tax
This report recommends that the HMRC share information on
individual high-risk companies with other tax authorities and requires U.K.
multinationals to file consolidated tax returns, noting that approximately
half of the growth in global trade currently comes from transactions between
related parties.
June 2, 2008
Risk Framework Guidance
Provides guidance for large businesses to pay the right
amount of tax at the right time and how to manage tax risk to ensure
compliance with the law. HMRC’s aim is to work with its customers to
understand how they manage their tax planning and compliance within the
wider commercial context in which they operate. It does not want its
interventions to duplicate unnecessarily the work that tax departments and
their advisers do to manage tax compliance risks.
December 2007
HMRC
Approach to Transfer Pricing Enquiries
The HMRC announced the appointment of
transfer pricing specialists and the provision of additional training aimed
at enhancing their specialist skills, as part of the introduction of the new
approach to transfer pricing enquiries. A new HMRC internal governance
process, effective January 2008, addresses issues concerning consistency of
approach, allocation of resource to risk, and broader strategic objectives.
October 2007
HMRC Approach to Transfer Pricing for Large Businesses
This consultation document seeks views on a new approach to
the administration of transfer pricing enquiries for large business. HMRC
welcomes views on these proposals which take forward the key themes of
giving increased and earlier certainty to business, moving closer to
real-time working and speedier resolution of issues.
June 20, 2007
Changes to Clearance Processes for Financial Transactions
The UK proposed extending its advanced pricing agreement
program to settle possible thin capitalization concerns, announcing that
unilateral “advance thin capitalization agreements” would allow taxpayers to
achieve assurances without having to seek out relief through double taxation
treaties.
May 7, 2007
UK/Japan Double Taxation Convention
Signed February 2, 2006, Entered into force October 12, 2006
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