INTM450010 - Transfer pricing records: overview

Entities within the charge to UK tax are required by law to keep such records as are needed to make and deliver a correct and complete return (FA98/SCH18/PARA21) & (TMA70/S12B).

This includes records to demonstrate that the results of transactions with related parties are determined for tax purposes according to transfer pricing rules (and, in particular, the application of the arm’s length principle (see INTM412040), unless the UK entity is covered by an exemption, such as the small and medium sized enterprises exemption (see INTM412070).

Following the recommendations of the Organisation for Economic Co-operation and Development (OECD) Base Erosion and Profit Shifting Action 13 report, which sets out a standardised approach to transfer pricing documentation, relevant persons are required to keep and preserve specific transfer pricing records in a format provided for in The Transfer Pricing Records Regulations 2023 (‘the Regulations’) in relation to certain UK entities undertaking controlled transactions at a material level (see INTM450104), in addition to general transfer pricing documentation (see INTM483030).

The requirement to keep and preserve specific transfer pricing records applies:

  • for Corporation Tax purposes, to accounting periods beginning on or after 1 April 2023
  • for Income Tax purposes, from the 2024 to 25 tax year

UK entities (see INTM450020) that are members of a Multinational Enterprise (MNE) group that meets the Country-by-Country Reporting (CbCR) threshold in a given period are within scope of this legislation. Relevant persons (see INTM450030) are then required to keep and preserve:

Both the Master File and Local File must be prepared in accordance with the OECD Transfer Pricing Guidelines approved by the OECD on 20 January 2022 (‘the 2022 Transfer Pricing Guidelines’).

The OECD’s approach to transfer pricing documentation is covered in Chapter V of the 2022 Transfer Pricing Guidelines. Annex I to Chapter V outlines the information to be included in a Master File, while Annex II to Chapter V outlines the information that is required in a Local File.

Together, the Master File and Local File make up the specified transfer pricing records which form part of the statutory records of any UK entity, or relevant person (see INTM450030), and should be available to HMRC upon request. Therefore, information notices requesting the specified transfer pricing records cannot be appealed. Further detail on when to provide transfer pricing records is given at INTM450050.

We expect the specified transfer pricing records to be reviewed annually as a minimum and updated as necessary (see INTM450040). Whether or not there are updates, there will need to be a specific set of finalised records for each period.

Where a UK entity does not have any material categories of controlled transactions, or the only material controlled transactions with related parties are covered by the UK to UK exemption (see INTM450105) or APA exemption (see INTM450106), the relevant person is not obliged to keep and preserve the specified transfer pricing records. However, they will still be required to retain such documentation as is reasonable to demonstrate that their transfer pricing meets the arm’s length standard (see INTM450080).