INTM480540 - Transfer Pricing: Operational guidance: real time working of transfer pricing issues (excluding thin capitalisation)

HMRC recognises that real time working (consideration of issues in real time), including TP, allows HMRC to examine issues when information and relevant business personnel are more easily accessed and can provide a degree of reassurance for customers at an early stage that their return will be considered as presenting a low operational priority.

However, in working with business to assess TP risks in this way it is important to note the formal APA process is the only way a customer can be given certainty about the TP treatment of transactions. INTM422000 and Statement of Practice 02/10 provide a full explanation.

CCMs are encouraged to use their relationships and engage with customers about a wide range of potential risks and can invite information about the business and their TP policies to inform their annual risk review processes which does not represent an enquiry that would require TP Governance. A useful reference point for the type of information available to assist with and inform that review in identifying potential transfer pricing risks is Country by Country reporting IEIM300020.

If HMRC or the customer do not wish to pursue an APA and the CCM perceives a significant risk or concern with the TP arrangements, may wish to ask further questions in real time. This real time working will be subject to TP governance and will involve a Making The Case (MTC) submission to the appropriate TP governance body. It should be noted that the governance process will not give the customer certainty on their TP arrangements. The purpose of these enquiries is to give the CCM and case team a better understanding of the customer’s transfer pricing policies and so enable the CCM to give insights into HMRC’s risk assessment approach. In this way formal statutory enquiries may become unnecessary, or at least be resolved more quickly. The customer is not obliged to participate in this real time working and may instead choose to wait until a statutory enquiry may be opened.

Where a TP issue is unsuitable for either an APA, real time working or formal enquiry, CCMs and case teams should not give a low-risk opinion or any other indication as to the perceived level of risk in the TP arrangements.

Any interest in applying for an APA should be referred to the following contact point, who will consider whether it is appropriate for the APA programme. CCMs and case teams can also get in touch to discuss the likely suitability of an APA for their customer:

e-mail: APA.mailbox@hmrc.gsi.gov.uk {#}

APA Lead
Business, Assets & International
Transfer Pricing Team
S1727 Stratford Regional Centre, Floor 8
Central Mail Unit
Newcastle NE98 1ZZ