The key event shaping a new transfer pricing (TP) landscape in the UK was the government’s decision to introduce the diverted profits tax (DPT) in April 2015. The primary intention of DPT is not to raise tax revenue per se, but to make multinational businesses review their TP arrangements. DPT has proved successful in this respect in helping to secure significant TP adjustments in a number of high risk cases.
The impacts on cashflow and potential disclosure requirements for a business have had the effect of reversing the burden of proof on taxpayers (in practice rather than legally), bringing considerable pressure to bear on them to positively evidence and demonstrate their filing position. Doing so has become more challenging due to the evidence-based forensic approach now adopted by HMRC. A typical case might involve:
In keeping with this wider, holistic view, being able to describe the global value chain, and demonstrate how this supports the TP policies becomes crucial for many businesses, especially where their intellectual property is kept offshore.
The key event shaping a new transfer pricing (TP) landscape in the UK was the government’s decision to introduce the diverted profits tax (DPT) in April 2015. The primary intention of DPT is not to raise tax revenue per se, but to make multinational businesses review their TP arrangements. DPT has proved successful in this respect in helping to secure significant TP adjustments in a number of high risk cases.
The impacts on cashflow and potential disclosure requirements for a business have had the effect of reversing the burden of proof on taxpayers (in practice rather than legally), bringing considerable pressure to bear on them to positively evidence and demonstrate their filing position. Doing so has become more challenging due to the evidence-based forensic approach now adopted by HMRC. A typical case might involve:
In keeping with this wider, holistic view, being able to describe the global value chain, and demonstrate how this supports the TP policies becomes crucial for many businesses, especially where their intellectual property is kept offshore.