INTM450090 - Transfer pricing records: master file

Where a UK entity has at least one material controlled transaction (see INTM450101) and meets the MNE group test (see INTM450020), a relevant person is required to prepare a Master File in accordance with the 2022 Transfer Pricing Guidelines.

As set out at paragraphs 5.18 to 5.21 of the 2022 Transfer Pricing Guidelines, the Master File should provide an overview of the MNE group’s business. It should cover the nature of the global business operations together with the group’s overall transfer pricing policies and its global allocation of income and economic activity.

The information presented in the Master File should be for the MNE group as a whole and place the MNE group’s transfer pricing practices in their global economic, legal, financial and tax context. In certain circumstances, the information may be presented by line of business.

Annex I to Chapter V of the 2022 Transfer Pricing Guidelines sets out the information that the relevant person is required to include in a Master File and groups the information into five categories:

  • the MNE group’s organisational structure
  • a description of the MNE group’s business or businesses
  • the MNE group’s intangibles
  • the MNE group’s intercompany financial activities
  • the MNE group’s financial and tax positions

A Master File must be provided to HMRC within a reasonable period (normally 30 days) from receiving an information notice (see INTM450050). The relevant person is required to produce a Master File even if a copy of the Master File or the information needed to prepare a Master File in accordance with Annex I to Chapter V is in the power and possession of another member of the MNE group (see INTM450060).

Where an MNE group prepares a single Master File in accordance with the 2022 Transfer Pricing Guidelines and makes the document available to all relevant persons for UK entities within the group to provide to HMRC upon request, the relevant person will be considered as meeting its record keeping obligations in relation to the Master File. In these circumstances, each UK member of the MNE group is not required to prepare a separate Master File and can instead rely on a single Master File.

In cases where the MNE group has prepared a Master File but it does not comply with Annex I to Chapter V, the relevant person will need to amend the document so that it is in line with the 2022 Transfer Pricing Guidelines. As above, each entity is not required to separately amend the Master File as long as a copy exists adhering to the 2022 Transfer Pricing Guidelines and is made available to all UK entities and relevant persons should HMRC request a copy.

HMRC requests for the Master File will generally cover the whole MNE group. If the information is arranged and separated by line of business, then the information for all lines of business should be provided unless the relevant HMRC officer specifies otherwise.