HMRC investigating of medium-sized firms’ transfer pricing arrangements
It has been reported that HMRC’s local compliance teams have been investigating the transfer pricing arrangements of medium-sized firms. This work has, apparently, yielded significant tax recoveries.
The worry is that this success could mean that investigations of medium-sized firms’ transfer pricing arrangements could increase.
Transfer pricing concerns the charges made between connected parties for goods, services or intangible assets such as intellectual property. Medium-sized businesses (in this context, those with no more than 250 employees and either turnover of less than €50 million or balance sheet value of less than €43 million) need not apply arms’ length terms unless so directed by HMRC.
Historically, medium-sized businesses have assumed that they need not make adjustments and would not face an investigation in this area.
However, given the aggressive approach that HMRC is apparently adopting, it is important now to review transfer pricing compliance.
Date: 16th May, 2014
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