Home Business NewsFinance News Woah! £3.8bn worth of tax under question by HMRC

Woah! £3.8bn worth of tax under question by HMRC

by LLB Reporter
5th Jun 17 11:21 am

New study finds 

The number of transfer pricing reviews into businesses undertaken by HMRC totaled 362 in 2015/16, as the clamp down on abuses continues, says Pinsent Masons, the international law firm. 

‘Transfer pricing’ relates to the pricing of the transaction when two companies which are part of the same multinational group trade with each other. It is particularly relevant where companies are located in different tax jurisdictions. Setting an appropriate transfer price is a difficult exercise in complex transactions, so disputes are common. Tax authorities target transfer pricing which they believe has incorrectly reduced tax in their jurisdiction. 

Pinsent Masons explains that transfer pricing is an area of real focus for the HMRC, and they have continued to invest in staff to tackle issues relating to it over recent months.  

Pinsent Masons highlights that the amount of tax which HMRC views as potentially under dispute in relation to the UK’s 2000 largest businesses’ transfer pricing is rising, reaching £3.8bn in 2016*, up 60% on the previous year*.

There has been a slight fall on the total number of reviews compared to last year (by 10%), when 415 were undertaken. This may suggest a focus on higher-value, large-scale disputes. 

Heather Self, Partner at Pinsent Masons, comments: “Transfer pricing remains an area of intense focus for HMRC. They have been investing in specialists on the issue and businesses need to ensure that compliance procedures surrounding the process are robust.”

“The value of tax HMRC believes it could be owed has risen substantially, and we are likely to see increased activity in this space going forward.”

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