Forthcoming change: In June 2023, HMRC opened a consultation on the ‘Reform of UK law in relation to transfer pricing, permanent establishment (PE) and Diverted profits Tax (DPT)’. A summary of responses was published on 16 January 2024. For more information about the consultation, see News Analyses: TAMD 2023—consultation on reform of permanent establishment rules and TAMD 2023—consultation on reform of diverted profits tax.

On 28 April 2025, the government opened a consultation on draft legislation containing measures to (i) align the UK’s domestic PE rules with the 2017 version of the OECD Model Tax Convention and (ii) replace DPT as a standalone tax with a new charging provision within corporation tax for ‘unassessed transfer pricing profits’ (UTPP), whilst maintaining the assessment framework from the DPT regime. A policy paper was also published alongside the consultation. The policy paper states that the earliest operative date for these measures ‘will be from 1 January 2026’. The consultation ends on 7 July 2025. See News Analysis: Tax update spring 2025—Tax analysis.

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