Transfer pricing

Transfer pricing

FORTHCOMING CHANGE relating to UK transfer pricing legislation: Finance Bill 2026 (as introduced) contains provisions which make multiple changes to the UK’s transfer pricing legislation. With effect for accounting periods beginning on or after 1 January 2026, when enacted these measures will, amongst other things, remove UK-to-UK transfer pricing (subject to exclusions in order to prevent opportunities for tax arbitrage), amend the participation condition, clarify that the OECD Model Tax Convention and OECD Transfer Pricing Guidelines are interpretative aids, and make several changes to the provisions governing financial transactions to better align the UK rules with the OECD Transfer Pricing Guidelines. Alongside these changes, the government also announced at Budget 2025 that it would be proceeding with a requirement for in-scope multinationals to report information annually on cross-border related party transactions for accounting periods beginning on after 1 January 2027—the technical regulations for this new ‘International Controlled Transactions Schedule’ (ICTS) are expected to be published in spring 2026. For more on the changes being made, see News Analyses: Finance Bill 2026—reform of UK law in relation to transfer pricing, permanent establishment and diverted profits tax,

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Latest Tax News

Tax weekly highlights—19 March 2026

This week's edition of Tax weekly highlights includes: (1) the enactment of Finance Act 2026 on 18 March 2026, (2) HMRC launching a consultation on extending the Uncertain Tax Treatment regime, (3) News Analysis on the Court of Appeal’s decision in Muller UK and Ireland Group LLP that amortisation debits were correctly disallowed by HMRC, (4) News Analysis on the UT’s decision in Putney Power Limited on the issue of whether the appellants had begun to trade by the relevant date for EIS relief purposes, (5) new HMRC guidance on multinational top-up tax and domestic top-up tax reporting software, and (6) News Analysis on the FTT’s decision in Countrywide Partners Limited to uphold a penalty for failure to comply with a stop notice issued under the promoters of tax avoidance schemes (POTAS) rules.

Upper Tribunal denies EIS relief as trade not commenced (Putney Power and Piston Heating v HMRC)

Tax analysis: The Upper Tribunal (UT) has held that the First-tier Tax Tribunal (the FTT) made a material error of law in its approach to determining when a trade has ‘begun to be carried on’ by a company for the purposes of qualifying for Enterprise Investment Scheme (EIS) relief under section 179(2)(b) of the Income Tax Act 2007 (ITA 2007). The FTT had identified a set of principles by reference to factors which were of relevance in previous cases and applied those ‘legal’ principles to determine that neither Putney Power Limited (‘Putney’) nor Piston Hearing Services Ltd (‘Piston’) had begun to carry on a trade by the relevant date of 4 April 2018. The UT set aside the FTT’s decision on the basis that the FTT had sought to apply a principles-based test which did not exist as a matter of law. The proper approach requires a multi-factorial evaluation of all of the circumstances in the case at hand. The UT re-made the decision but ultimately reached the same conclusion as the FTT, dismissing the appeals of both Putney and Piston and holding that neither company had commenced trading by the relevant date. The decision is significant because it clarifies that there is no strict legal test for when a trade commences: the question remains highly fact sensitive and will be determined by reference to the particular facts and circumstances of each case. Written by Kate Ison (partner at Macfarlanes LLP) and Victoria Braid (associate at macfarlanes LLP).

FTT upholds £1m penalty for stop notice breach (Countrywide Partners Ltd v HMRC)

Tax analysis: In Countrywide Partners Ltd v HMRC, the First-tier Tax Tribunal (FTT) upheld HMRC’s £1m penalty on the taxpayer for breach of a stop notice under section 236A of the Finance Act 2014 (FA 2014), holding that the appellant continued to promote the arrangements by organising and managing them (including issuing payslips and making payments) for existing users.

Court of Appeal upholds UT decision disallowing amortisation debits (Muller UK and Ireland Group LLP and others v HMRC)

Tax analysis: In Muller UK and Ireland Group LLP and others, the Court of Appeal dismissed the appellants’ appeals against the Upper Tribunal (UT)’s decision that amortisation debits were correctly disallowed by HMRC.