INTM450106 - Transfer pricing records: local file exemptions - Advance Pricing Agreement (APAs)

In general, the Local File must include information on all material categories of controlled transactions that the UK entity is party to.

However, where a controlled transaction is covered by an APA (see INTM422020) and that APA was agreed prior to the date of commencement of the specified transfer pricing records requirements (see INTM450010), details of that controlled transaction may be excluded from the Local File.

For controlled transactions covered by APAs agreed on or after the date of commencement of the transfer pricing records requirements, no exclusion applies. Full details of the controlled transactions should be included in line with the Local File requirements set out in Annex II to Chapter V of the 2022 Transfer Pricing Guidelines. However, to the extent that the information required is accurately covered in the APA or APA annual report, the requirement can be met by simply reiterating that existing information in the Local File.

Key details that may be taken from the APA or APA annual reports and stated in the Local File include:

• the parties to the covered transaction
• a description of the covered transaction
• the amount of the intra-group payments and/or receipts for the covered transaction
• the transfer pricing methodology – however there is no requirement to update the comparables where an APA is in effect
• the actual price for the relevant period and a reconciliation between the taxpayer’s financial statements and tax return

This list is not exhaustive, and the Local File can include any additional information beyond that which is included in the APA or APA annual report as required to provide context to the covered transaction, such as comparability and functional analysis information.