Attention UK business decision-makers: big updates are coming to the UK’s Transfer Pricing framework — and they go well beyond documentation. Here’s what you need to know:
If you’re part of a multinational with operations in the UK, these changes will likely impact your tax compliance and intercompany pricing policies.
1. End of the TP exemption for medium-sized enterprises
The current documentation exemption for medium-sized enterprises (less than 250 employees, and less than €50M in turnover or €43M balance sheet) would be removed. Only small enterprises stay exempt, those with up to 50 employees and less than €10M in turnover or €10M balance sheet.
Key takeaway: If you’re a mid-sized player, your documentation obligations are likely to expand significantly.
2. Wider definition of “Enterprise” (Section 148 of TIOPA)
Now includes not only ownership but also participation in management, control or capital, plus common management agreements or arrangements designed to avoid TP scope.
Key takeaway: More corporate structures could be brought into scope, including those involving 25% to 50% shareholder relationships or indirect links.
3. New filing: International Controlled Transactions Schedule (ICTS)
A standardized form to disclose related-party cross-border dealings — covering even PE-to-Head Office transactions.
Key takeaway: Designed to enhance HMRC’s risk detection capabilities without excessive administrative burden.
4. Other relevant changes
- UK-to-UK transactions: Exempted from TP if there’s no tax loss risk.
- Intangible assets: One single rule — use arm’s length value for cross-border related-party transfers.
- Financial transactions: Explicit and implicit support must now be priced in, aligning UK rules with OECD Chapter X.
- Commissioners’ sign-off for TP adjustments: Scrapped.
- Unassessed TP profits and Corporation Tax: HMRC can assess TP adjustments even if a company did not initially self-assess any related TP profit in its Corporation Tax return.
Consultation closes 7 July 2025.
Now’s the time to assess your UK operations, related-party structures, and TP documentation strategy.
For more information: daniel.medvedovsky@basefirma.com