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Annex A — examples of helpful supporting records and information

Published 10 September 2024

UK businesses subject to transfer pricing rules are required by law to keep such records as are needed to make and deliver a correct and complete return. This includes records evidencing that transactions with related parties are priced in line with the arm’s length principle.

This annex contains examples of helpful types of supporting business records and information to retain to support the analysis and conclusions relating to the arm’s length return in:

• master and local files for businesses within scope of the Transfer Pricing Records Regulations 2023 and following Chapter V of the OECD Transfer Pricing Guideline — guidance on that statutory requirement can be found within the International Manual INTM450000

• filed returns for businesses not required to prepare master and local files but who must evidence that their return was correct and transactions arm’s length

It may also be of use to specialists requesting business information to determine appropriate transfer pricing policy.

It includes examples of supporting information in the following areas:

• general forms of data, information or records
• common areas of evidence-based analysis
• trigger events or areas of business change for which HMRC expect a greater depth of analysis

Whilst not exhaustive, the examples are comprehensive to allow businesses to identify examples of records or information that may exist within their business and select the most relevant. The examples are not intended as a ‘checklist’ of supporting information which we expect businesses to retain in full. The depth of supporting information required will vary by business depending on: 

• the nature and materiality of the transactions 
• the degree of business change
• any statutory master and local file documentation requirements 

Businesses that evidence support for their transfer pricing conclusions within master and local files, or who can readily provide supporting information upon enquiry, are likely to have earlier certainty of any transfer pricing risk.

HMRC frequently observe the difficulty businesses experience trying to locate records when under enquiry at a later date, or after key staff have left the business. As this can lead to increased resource needs and compliance costs, HMRC recommend contemporaneous retention of supporting records and timely conduct of functional interviews where required. Records should ideally be retained until it is clear that the transactions will not be subject to enquiry and take into account GDPR obligations. 

General forms of data, information or records 

Transfer pricing positions are based upon the specific facts and circumstances of a business. Relevant facts relied upon in determining the transfer pricing position of a UK business should be supported. This is with reference to business records and information, for which finance and operational staff within the UK business may have a greater awareness of what may exist than others. 

General examples of objective forms of records and information UK businesses may wish to retain include, but are not limited to:

• business change or reorganisation communications, such as staff announcements, intranet updates, internal instructions and procedures about the reorganisation process
• correspondence and documented discussions such as letters, emails, memos, meeting notes, notes of telephone conversations
• records of decision inputs such as business cases, presentations and proposals, board or committee papers, meeting minutes and email approvals, decision cascades, market research, make versus buy comparisons, discounted cash flows and forecasting scenarios, investment assumptions and commercial valuation models 
• risk and governance data such as 10-K, business reviews or group accounts key risk summaries, risk registers and allocations of mitigation responsibilities, risk matters reserved for the board or audit and risk committees, delegations of authority, internal governance procedures 
• analysis of impact of business announcements or external factors on share price 
• product and services data such as product or service ranges by division or business unit, strategic third party alliances, joint ventures and partners, channels to market, turnover and operating margin by geography or segment
• supply chain and value chain information such as analyst reports, functional return on investment (ROI) data, internal value chain analysis, supply chain maps, functional locations, procurement hubs
• organisation charts and management reporting lines 
• business performance records such as leadership updates, performance presentation packs, key performance indicator metrics and dashboards, strategic reviews, management accounts data, functional share or cash bonus targets and award profiles 
• independent evaluations such as valuation reports, competitor analysis, operational efficiency benchmarking , voice of customer feedback or customer surveys 
• business strategy records such as business plans, strategy plans, analyst and investor briefings, industry trends and reports, project objectives
• system data such as financial system reports, HR system reports such as Workday, asset registers 
• transactional records such as contracts, invoices and credit notes, accounting entries, written arrangements setting out transactional terms outside of formal contracts
• glossary of terms within the business (acronyms explained) 

Examples of helpful contemporaneous records and evidence to identify and retain for common areas of fact based analysis

Common area of fact based analysis	Examples of helpful contemporaneous records and evidence to identify and retain
Transfer pricing policies, intra-group contracts and informal arrangements	Copies of group transfer pricing policies that apply to the accounting period. Signed intra-group agreements or contracts governing the terms of goods and services between UK entity or entities and other group entities together with any appendices and updates. Documents evidencing written arrangements and terms relevant to the transactions subject to transfer pricing that are not in formal contractual form, for example, written communications, emails or correspondence, meeting notes.
UK people functions	Local organisation charts and details of individuals to whom local management reports and the jurisdictions in which such individuals maintain their principal offices. Group staff grading structure relevant for UK functions (from HR manuals or system records) with descriptions of what a grade represents in narrative or number of reports below c-suite. Details of the number of UK employees (or UK secondees) by grade and function or department. Job titles for senior staff working in the UK with grade and reporting line. Role specification for heads of function, department, business unit or division led out of UK, for example, from job adverts or job descriptions showing teams and geographies they are responsible for or functional interview notes. Project operating models, for example, project teams and team membership by grade where these represent important functions of the UK business. Profiles of bonus, share and incentive schemes for which UK staff are eligible, detailing eligible grades and value of awards made to UK employees out of global award value. Original copies of preferably verbatim functional interview notes organised by specialists which can be particularly helpful where no other audit trail exists. Details of key strategic decision making forums relevant to the UK transfer pricing position, including remit of the forum and delegated authority, for example, terms of reference, forum minutes of decision made, functional interview notes, UK and non-UK voting members, example agendas. Business operating manuals, standards, charters of responsibility, and protocols that detail the functions and processes within the commercial operating model to be followed, for example, a franchise operating handbook or process manual for a critical function. People function evidence of a similar nature to the above for offshore hubs or intermediary entities who are counterparties to the transactions.
Economically significant risks	Key group risks, for example, risk factors section of group accounts, business reviews, 10-K or risk registers detailing key risks and mitigation approaches. Descriptions of the structure, role and membership of committees and decision bodies responsible for management of economically significant risks within the group and any delegation of risk management responsibilities and escalation criteria. Criteria under any group risk control framework for ranking or classifying important risks, for example, risk framework guidance on what constitutes a strategic risk. Documentation of the response (who did what) where a significant risk crystallised. Analysis of material impacts of business announcements and external factors on share price that indicate risk and opportunity, for example, competitor announcements, industry regulation, product pipeline successes and failures.
Allocation keys	Details of allocation keys used to allocate non-product or service specific costs within or between entities.
Management expenses	Break down of costs included within any management recharge, for example, cost centres and general ledger code reports for ‘included’ expenditure. Written processes for identifying and recharging management expenses and copies of invoices raised. Written arrangements or contracts governing management expenses. Analysis of deductibility of management expenses for corporation tax purposes.
Intra-group asset transfer valuations	For assets originally acquired in whole or in part from third parties, asset purchase agreements, bid presentations and acquisition valuations. Proceeds allocations by asset where not specified in asset purchase agreement. For assets still in development, the stage of development with reference to the businesses Research and Development (R&D) processes and further development work yet to be undertaken. For example, product is in concept or develop for launch phase, forecast of costs to develop and development location selected, development timeline and decision stage gates per business development process. Internal or third party valuation reports regarding the transfer, for example, independent valuation report commissioned, internal forecast of future cost and revenues associated with the asset, discounted cash flow modelling for the asset.
Above market functions	List of senior roles employed by or seconded to UK business whose role scope benefits group entities beyond that of the UK business by job title and grade. Examples might include regional or global business unit leads, function heads, therapeutic area leads, service, product or technology line heads, programme leads executive or Vice President or Senior Vice President leaders. Definition of senior grade in the context of group grading system, for example, up to c-suite-6 unless the staffing grade wholly falls within the bottom 40% of the grades when the overall grades are listed in ascending order of seniority. Copies of any internal or external job descriptions used for recruitment or HR purposes for senior above market functions. HR or system data on where above market roles are based, their employing entity, function, job title and upward reporting line. HR or system data on direct reports of the above market roles including their employing entity, grade and where they are physically located. Profiles of bonus or share schemes for department or functions in which above market roles sit, for example, scheme eligibility , summary of award performance Key Performance Indicators (KPIs) and UK versus rest of the world awards. Details of outsourcing arrangements with third parties covering similar activities to the above market roles, for example, strategic regulatory consulting, marketing strategy, clinical trial design, market development, European training programmes, global account management, customer product support. Documents detailing of key strategic decision making forums within the group that UK employees are a member of, including remit of the forum and including specific delegated authority, roles of individual members and their employing entity. Examples might include charter or terms of reference, core voting membership, forum minutes and audit trail of decisions made, UK and non-UK voting membership, example agendas. Functional interview notes for above market roles. Organograms showing departmental structure and identifying leadership teams (for example, HR system records). You may also wish to read appointment or cessation of UK based staff in senior global or regional roles offering strategic or leadership services within this annex for further suggestions.

Trigger event or business change	Examples of helpful contemporaneous records and evidence to identify and retain
Significant change to the scope of goods and services provided to or from the UK such as start or cessation of a channel to market, changes to functions	Documents detailing commercial and strategic drivers underlying the change in scope of goods and services and alternatives considered. Examples might include meeting minutes, memos and emails from individuals or committees documenting the decision to make the change, strategy papers, product pipeline reviews, make or buy evaluations, business cases, citing alternative evaluations. Documents detailing the impact of the change in scope on UK assets and people functions, for example, investment or divestment business cases, internal communications. Written contracts, arrangements and terms with the UK entity introduced, terminated or revised as a result of the change in scope, for example, copies of intra-group contracts or written arrangements terminated, copies of notice periods given, new intra-group contracts or written arrangements. Where outsourced to a third party, a copy of the third party agreement including pricing for the goods or services previously provided to or from the UK.
New third party contracts for similar goods or services to those the UK receives or provides to group entities	List of contracts identified for filtering for most relevant. Filtered list if required due to volume, prioritising contracts with UK entities or European affiliates, contracts with closest matches to type and value of services and goods UK receives or provides to group entities (or clear subset). Summary of key terms of filtered list used by specialists to determine whether they may help inform transfer prices. Examples might include parties, term, exclusivity, geography, product or service, form of payments or price mechanisms, renegotiation triggers, termination and notice periods. Copies of contracts and appendices or related agreements with good comparability that may inform terms and pricing of goods and services provided to or by the UK to group entities, or a subset of them. Copies of confidentiality clauses for contracts that do not provide an exception for provision of information to government authorities where permission from the third party may be required to share, or documentation of key terms on an anonymised basis.
Merger, disposal, or consolidation of activities or assets of UK entities following merger and acquisition activity with a third party	Profiles of the people impact of internal business restructuring or reorganisations following merger, acquisition or disposal. Examples might include internal communications materials and announcements issued, staff profiles pre and post redundancy, details of Transfer of Undertakings (Protection of Employment) between entities, job adverts for new roles created in the UK or relocated offshore, changes to functional locations or reporting lines. Company press releases, investor briefings and internal communications regarding the third party transaction. Audit trail of final structuring or siting decisions affecting UK entities out of the options considered. Examples might include board or decision making body papers, proposals submitted and meeting minutes, supporting financial scenarios and forecasts. Internal and independent valuation reports regarding the third party transaction where activities or assets move to or from the UK following the transaction. Third party transaction documents detailing what was acquired and records of allocation of proceeds. Copies of any relevant regulatory reviews and outcomes, for example, competition authority review findings or Hart Scott Rodino clearances. Copies of transfer pricing policies applied to the UK entity pre and post restructure and any resulting revisions. Records of new or changed leadership teams, governance or decision making forums and what they have replaced. Examples include organograms, governance standard operating procedures (SOPs), terms of reference or charter detailing roles and remit and specific delegations of authority, membership, meeting minutes or records of decisions made. Commercial guidance documents created for the restructured operations, for example, new SOPs, operating manuals or parameters. Restructuring project details, for example, internal project ‘name’, project initiation or scoping documents, project team members by role and grade. Financing details, for example, source of capital for UK acquisitions, covenants or guarantees, intra-group loans or balances and interest applied. Documentation setting out how know-how, data and SOPs will be transferred where moving out of the UK to new location. Examples might include record of UK employees seconded to set up or train at new location, index of data and documents transferred, ongoing service level agreements.
Internal business restructuring affecting the UK supply chain, group entities transacted with, or nature of goods and service provided to or from the UK	Contemporaneous documentation which sets out the business justification for the internal group restructuring and any associated third party transactions. Examples might include presentations, reports, papers or other documentation that form part of the commercial rationale and business case for the restructuring, revised supply chain maps, financial forecasts of cost and benefits, restructuring step plans. Records of the people impact of internal business restructuring. Examples might include internal communication issued, UK staff profile with reporting lines from HR systems pre and post restructure, revised organograms, details of Transfer of Undertakings (Protection of Employment) between entities, job adverts for new roles created in the UK or relocated offshore. Records of final structure decided upon out of the options considered. Examples might include board or decision making body papers and proposals submitted, meeting minutes, supporting financial scenarios and forecasts, advisory reports, impact assessments. Copies of transfer pricing policies applied to the UK entity pre and post restructure, including any revisions to the policies. Contemporaneous information supporting valuation and underlying assumptions relevant to the value of any assets or rights transferred to or from the UK as a result of the restructure. Examples might include forecasts, discounted cash flow scenarios, valuations undertaken. Copies of any valuation, proceeds allocation or deal documentation relating to third party acquisitions or disposals covering functions, assets and liabilities affected by the business restructuring. Written contracts and arrangements with the UK entity affected by or introduced by the restructuring. Examples might include copies of intra-group contracts or terms for agreements terminated, copies of notice periods given, new intra-group contracts or written arrangements which give effect to the movement of functions, assets, or risks into or out of the UK during the relevant period. Records of new or changed leadership teams, governance or decision making forums and what they have replaced. Examples might include new or revised organograms, governance SOPs, terms of reference or charter detailing roles and remit and specific delegations of authority, membership, meeting minutes or records of decisions made. Commercial guidance documents created for the restructured operations. Examples might include new SOPs, operating manuals or written guidance on processes or parameters. Records of the restructuring project. Examples might include project ‘name’, project initiation or scoping documents, project team members by role and grade, project plan.
Opening or closing of UK business locations or outsourcing of key UK functions	Company internal and external press releases and communications regarding the site opening or closure. Records of the people impact of the opening or closing of location or outsourcing. Examples might include internal communication issued, UK staff profile with reporting lines from HR systems pre and post change, revised organograms, details of Transfer of Undertakings (Protection of Employment) between entities, job adverts for new roles. Records of the decision to open, close or outsource. Examples might include business cases or written proposals, financial forecasts including scenarios or sensitivity analysis, minutes or written records of the decision by the board or committee with authority to make the decision. Capital expenditure investment proposals including forecasts of payback and return on investment (ROI). Notes of accounting provisions or exit costs associated with the change. Copies of outsourcing agreements, including quote or bid proposals from potential providers and in house versus outsource pricing comparisons. Documentation setting out how know-how, data and SOPs will be transferred to new location. Examples might include record of UK employees seconded to set up or train at new location, index of data and documents transferred, ongoing service level agreements.
Transfer to or from UK of any intangible assets such as intellectual property or commercialisation rights	Records documenting the business case or basis for the change in ownership. Examples might include board minutes and actions, restructuring proposals, business cases, papers and presentations including alternatives considered, commercial strategy papers. Documents supporting the valuation given to the intangible asset. Examples might include commercial scenario forecasts and discounted cash flow calculations, contemporaneous valuations of the intangible or intellectual property. Intra-group agreements licensing rights to intangibles and any appendices or amendments. Records of the stage of development of intangible property transferred and typical value share received in the industry at that stage. Examples might include value share paid or received from similar stage transactions with third parties, licensing or deal trend reports, investor product pipeline summaries, press releases. Industry information supporting the use or absence of upfront payments, contingent milestones, unspecified royalties or royalty ratchet mechanisms in payment terms. Examples might include common payment profiles for sector deals, common payment terms in third party acquisition or disposals by the group of a similar nature, typical point in intangible lifecycle where royalties are set between third parties. Industry information supporting the entitlement to or absence of termination or exit charges for the transferor. Examples might include standard third party industry clauses regarding termination, reversionary or post patent rights, or where liabilities accrue in the event of termination. Records of change in ownership registration, for example, copies of any intellectual property assignments submitted to patent or trademark offices related to the intangible property transferred. Accounting treatment notes under local generally accepted accounting principles (GAAP) indicating any transaction entries to the statutory accounts in relation to the intangible transfer. Financing details for acquired intangibles, for example, source of capital including intra-group loans or balances and interest applied.
Significant investment in new fixed assets that are not replacement capital	Capital expenditure investment proposals including forecasts of commercial payback and ROI, for example, base case, upside and downside discounted cash flow models. Documents detailing commercial and strategic drivers underlying investment decision and alternatives considered, for example, strategy papers, product pipeline, make or buy evaluations, business cases, citing alternatives considered, capital expenditure committee minutes and decisions. Details of any intra-group financing of the investment, for example, terms of intra-group loans, notes, equity injections. Capital project team structure by grade, project scope and plan.
Appointment of UK based staff in senior global or regional roles offering strategic or leadership services	Job title per employment contracts or HR system records and copies of any internal or external job descriptions used for recruitment purposes. Grade of senior appointment in context of group grading system. HR or system data on where the individual that the senior appointment operationally reports to is based, their employing entity and job title. HR or system data on direct reports of the senior appointment, including their employing entity, grade and where they are physically located. Records of leadership teams, governance or decision making forums that include the senior appointment. Examples might include organograms, terms of reference or charter detailing roles and remit and specific delegations of authority, membership, meeting minutes or records of decisions made.
Cessation of UK based staff in senior global or regional roles offering strategic or leadership services	Details of any redundancy costs and where these were borne. Details of location in where role was replaced, for example, internal or external job adverts or job descriptions, revised organograms. Supporting information to demonstrate that UK roles ‘moved offshore’ are not duplicated in the UK, for example, profile of functional roles remaining in the UK.
Franchise fees and similar single fee arrangements	Evidence of the existence of such arrangements in the sector (industry practice), or between the group and third parties. Examples might include third party agreements, industry franchise lists or press releases of franchises entered into. Contemporaneous documentation of how the responsibilities, risks, and anticipated outcomes arising from entering the arrangement were intended to be divided at the time. Examples include emails, notes and minutes detailing the rationale and considering the form of the arrangements, copies of the signed intra-group franchise or single fee arrangements. Forecasts and analysis of incremental value anticipated to accrue to the franchisee or payee from the arrangement beyond consolidation of invoices. Examples might include pre and post arrangement margin scenarios, illustrations of how any limitations on financial upside or downside will operate in practice. Documentation of how these assets and services were accessed by the UK prior to the arrangement, and alternative arrangements realistically available to the UK. Examples might include intra-group service agreements, third party contracts for services. Lists of the assets included in the fee and where they were originally acquired from and at what value. List of the services included in the fee and who these are contracted out to if not provided directly by the franchisor or principal. Evidence that any changes to the franchise fee reflect industry practice. Examples include similar terms in third party agreements or press coverage of renewals or renegotiations for similar arrangements.
New cost share, cost contribution arrangements, changes to participants, contribution or reward levels New or amended arrangements with respect to the funding of R&D activities relevant to the UK business	Copies of the cost share or cost contribution intra-group agreements, intellectual property ownership policy and any amendments. Evidence of the intentions of the parties in entering into the arrangement. Examples include emails, presentations, minutes or written proposals regarding the arrangements. Records detailing the functional and asset contributions to the arrangement by the original participants. Examples might include contemporaneous valuations or forecasts of the anticipated benefits and contributions, associated service agreements. Records supporting any buy in payments to balance initial contributions of value including intellectual property. Examples might include contemporaneous valuations performed on change of participant, contemporaneous forecasts of anticipated benefits to new participant, reappraisal of participant contributions following the change. Documents assessing how or if the participants’ business activities have changed as a result of the arrangement. Examples might include new role adverts, organograms, new decision making forums or functional responsibilities. Financing details, for example, source of capital for UK buy in or how ongoing contributions will be funded including intra-group loans or balances and interest applied.
Growing intra-group payable or receivables balances on uncommercial terms	For intra-group balances significantly above payment terms, copies of the trade terms, applicable interest rates and anticipated settlement dates.