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HMRC Update on Transfer Pricing Issues
HMRC have been dicussing transfer pricing issues in the UK and what these mean for British industry. Taxand UK interviews the Head of the UK Tax Authority Transfer Pricing Team regarding key issues impacting business.
Key discussion topics from the interview are outlined below:
- At present, there is no UK support to introduce safe harbours and a hindsight test for transfer pricing although the ongoing Organisation for Economic Cooperation and Development (OECD) consultations in these areas will be considered
- The interaction of transfer pricing with the new UK patent box regime is still in its infancy and HMRC is still formulating thoughts on the key issues
- There is no specific push for transfer pricing audits, but HMRC has observed an increase in the number of tax efficient supply chain reconstructions and will look to audit these transactions in the first instance
- HMRC has also seen an increase in the number of Advance Pricing Agreements (APA) applications and a strong desire from international tax administrations to improve their own APA process using UK experience.
Alongside the rise in transfer pricing enquries in 2012 HMRC have noted a rise in tax efficient commercial restructurings, which require an increase in audit work. Particualrly in APA submissions HMRC urge companies to research their submission, as this will result in a quicker audit process. As well as becoming knowledable on APA submissions, it is recommended that organisations keep a watchful eye on changing transfer pricing policies, as this will help them stay ahead.
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