United Kingdom’s Revenue Authority Increases TP Profit

June 4, 2018

United Kingdom’s Revenue Authority Increases TP Profit

~1-minute read. This article is part of our CrossBorder Audit Alert series.

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Steady Increase of Transfer Pricing Revenue

 

In the years from 2011/12 to 2016/17, the HMRC secured GBP 5.914 billion of additional tax by challenging the transfer pricing arrangements of multinationals. The total amount secured in 2016/17 was GBP 1.6B, which was approximately a 50% increase from 2015/16. Since 2008, the HMRC has increased the number of staff dealing with international tax risks, including transfer pricing.

As of March 31, 2017 there were 82 full time equivalent staff in the transfer pricing group. The diverted profits tax yield in 2016/17 was a 90% increase from the previous year number of GBP 31M. In 2016/17 145 DPT notifications were received compared to just 48 in 2015/16.

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In an attempt to raise revenue and lower the budget deficit, HM Revenue and Customs announced that that between 2011-2016, HMRC secured 5.9 billion of additional tax by challenging the transfer pricing arrangements of multinational corporations! The total amount secured in 2016/17 was 1.6B which was a 50% increase over the amount collected in 2015/16.

Similarly, the Diverted Profit Tax, which is designed to encourage large companies to comply with international tax rules including transfer pricing, raised 281M in 2016/17. This was a 90% increase from 2015/2016.

To collect this amount, the HMRC has 82 full time staff in its specialist transfer pricing group. This number is expected to increase dramatically.

CrossBorder Solutions predicts that this upward trend will continue and MNC taxpayers should expect transfer pricing audits and adjustments to increase dramatically.

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