Transfer pricing administration and dispute resolution
B4.180 Transfer pricing enquiries, penalties and appeals
Transfer pricing is part of the corporate tax self assessment regime and therefore the corporate tax return should reflect transfer pricing arrangements that satisfy the arm's length principle and comply with UK transfer pricing law. The return will be reviewed by HMRC for transfer pricing risks as part of the overall business risk review performed on any tax return, see A6.102. If the corporate tax return is submitted on time HMRC will have 12 months from the statutory filing date1 to raise a transfer pricing enquiry, this may be alongside enquiries into other aspects of the return or as an enquiry solely into transfer pricing.
Once an enquiry has been raised there are two main HMRC policies which set out the framework governance for the conduct of the enquiry, these are:
• transfer pricing operational guidance or transfer pricing governance, which is set out from INTM480000 onwards, and
• litigation and settlement strategy2 (LLS)
The LSS applies to all tax disputes and therefore covers transfer pricing enquiries, the operational guidance sets out the required process and working practices. The policies are both discussed further below.
Transfer pricing operational guidance
The transfer pricing governance applies to any enquiry where TIOPA 2010, ss 146–217 (Part 4) or the arm's length principle may be invoked. It therefore covers:
• transfer pricing of goods and services
• post-return thin capitalisation
• private equity leveraged buy-outs
• attribution of profit to a
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