Transfer Pricing at the Cornerstone of Tax
Byline: Drew Bailey
As well as the UK Government's tax receipts shortfall in July, HMRC released a set of statistics on transfer pricing compliance focusing on enquiries, as well as the use of advance agreements and tax treaty procedures to avoid double taxation.
The yield for HMRC from transfer pricing enquiries was c.pounds 1.1bn in 2011/12, more than double the previous year. In total, yield from transfer pricing enquiries over the last five years was c.pounds 4.7bn. In particular, the amount from Local Compliance (as opposed to LBS) enquiries, increased more than six-fold over this period - transfer pricing is clearly an ever important issue for international businesses of any size and complexity.
The figures demonstrate that HMRC continues to take transfer pricing matters very seriously and, consequently, may well sustain or increase the level of investment in enquiries.
Well-advised businesses will be ensuring they have given the appropriate level of attention to transfer pricing, formulating acceptable policies, as well as ensuring these are implemented and adequately documented. …