As part of the ‘Tax Day’ consultation announcements, HMRC outlined that changes to the transfer pricing documentation rules will allow for more targeted compliance interventions. Changes to the rules will also provide businesses with greater certainty whilst aligning with the requirements of global tax administrators.
HMRC figures state that transfer pricing compliance activity has raised more than £6bn in additional revenue, over the last five years.
Under current UK rules, companies are not required to keep specific transfer pricing records. However, sufficient records of complete/accurate returns need to be retained.
In the consultation document, a number of measures have been proposed, including the requirement for multi-national enterprises within the country-by-country reporting regime to provide a copy of the master and local files upon request. HMRC has proposed a timeframe of 30 days for this request however, this is still under review.
Under the consultation, HMRC have suggested a requirement for businesses to prepare an international dealings schedule, which would collect specific data, to enable HMRC to determine what types and levels of intra-group arrangements are in place.
The aim of this proposed rule change is to enable HMRC to focus its compliance resources on areas that are higher risk, whilst reducing the time in which it takes to resolve transfer pricing enquiries.
HMRC are seeking further views surrounding the implementation of any international dealings schedule, including what information should be disclosed, the format and how the information should be submitted.