Diverted profits tax

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

On 28 April 2025, the government opened a consultation on draft legislation containing measures to 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, including preliminary notices and charging notices. The 6% differential tax rate between corporation tax and DPT will maintained. Unlike the current DPT charge, UTPP will not apply to non-UK resident companies that avoid a UK taxable presence (section 86 Finance Act 2015). The new ETMO condition is similar, but much simpler, than the current provision. The insufficient economic substance condition is replaced by a tax design condition. The UTPP charge will be based on transfer pricing principles and, as such, the government considers that ‘this approach

To view the latest version of this document and thousands of others like it, sign-in with LexisNexis or register for a free trial.

Powered by Lexis+®
Latest Tax News
View Tax by content type :

Popular documents