The following Corporation Tax guidance note by Tolley in association with Pricewaterhouse Coopers provides comprehensive and up to date tax information covering:
Historically, transfer pricing enquiries were generally very resourceful, cost intensive and often continued for a number of years. To provide more focus to transfer pricing enquiries, HMRC introduced a ‘stage gate’ process in 2007, as set out in HMRC’s publication entitled ‘Making a Difference: Clarity and Certainty ’ for TP enquiries. Please refer to HMRC approach to transfer pricing enquiries for further guidance.
HMRC will undertake a full risk assessment prior to opening a transfer pricing enquiry, a procedure that emulates their general interactions with large businesses. If the result of this risk assessment process suggests that there is a low risk of a transfer pricing issue arising, the transfer pricing enquiry will not be pursued. HMRC state in INTM482040 that a number of factors taken together, rather than individual indicators alone, will signal the existence of a transfer pricing risk.
The results of the risk assessment will be used to compile a business case that is required to open a transfer pricing enquiry. For this reason, HMRC’s own guidance states that the risk assessment should be as detailed as is feasible in the circumstances, and should include the following:
A more detailed list is set out in INTM482130.
HMRC has introduced a team of specialists who are responsible for undertaking the risk assessment process and who will actively work alongside the customer relationship manager (CRM) or case co-ordinator. This improved process should result in enquiries where there are clear transfer pricing risk issues in the context of the groups or companies involved.
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