Documentation requirements

By Tolley

The following Corporation Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Documentation requirements
  • Content of documentation
  • EU guidelines
  • Deadlines for the preparation of documentation

Evidence to demonstrate arm’s length transfer prices need only be produced at the request of HMRC, but the documentation should be contemporaneous. That means that the documentation must not operate retrospectively but should instead precede the pricing analysis and provide a foundation for it. As such the mere existence of an intercompany agreement covering the transaction in question is not sufficient. Transfer pricing documentation must describe and justify how the price has been calculated.

The rules on documentation requirements differ across jurisdictions, and documentation prepared to satisfy overseas requirements may not necessarily satisfy UK requirements (and vice versa), although the requirements may begin to consolidate internationally following the introduction of further guidance in the OECD Transfer Pricing Guidelines as a result of the Base Erosion and Profit-Shifting (BEPS) project. See the OECD website  for further details. The further guidance is broadly the same as the EU guidelines set out below.

Where arrangements continue in force for more than one accounting period (eg a distribution agreement lasting several years), there is no need to prepare fresh documentation for each period, provided that the original documentation is sufficient to demonstrate that a complete and correct return has been made. Any significant changes in the nature or terms of the transaction(s) in question should be recorded and the documentation updated or amended. However, best practice is that economic benchmarking studies should be updated for new financial data at least every three years, assuming three years’ financial data was utilised for the purposes of calculating the original margins.

HRMC has issued guidance on their interpretation of the CTSA record keeping requirements for transfer pricing purposes.


The OECD action plan on Base Erosion and Profit Shifting  (BEPS) includes proposals to amend transfer pricing documentation requirements.

Content of documentation

The information which is included in transfer pricing documentation will depend upon the functions

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