Transfer Pricing: The Government's Latest Compliance Proposals

On 28 April the Government made an important set of transfer pricing policy announcements, including final decisions and draft legislation covering the package of measures consulted on during 2023, and two new proposals for consultation. While the 2023 package is largely technical, the new measures being consulted on, which for many businesses will be the most likely to have a practical impact, are aimed at improving compliance.

In this article we review the proposed measures and consider how they fit into HMRC's overall strategy for transfer pricing compliance.

The context

In the decade since the introduction of diverted profits tax in 2015 HMRC has devoted large and increasing amounts of operational resource and policy-making bandwidth to transfer pricing compliance. That focus reflects a strong political imperative to protect the UK's tax base from erosion, both as a result of corporate tax planning and other countries taking an overly expansive view of