Overview of approach to transfer pricing risk

There is an agreed framework in relation to transfer pricing that sets out the process for handling enquiries, with each case passing through a series of steps or ‘stage gates’. This methodology aims to provide a structured, consistent approach with an expected time frame for resolution of 18 months for the majority of cases (36 months for particularly complex and high risk cases). Please refer to the HMRC approach to transfer pricing enquiries guidance note for further details.

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 states 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