Commenting on today’s Transfer Pricing Statistics (PDF 92 KB) from HMRC, Andrew Hickman, Transfer Pricing partner at KPMG in the UK, said:
“Today’s figures show that HMRC continue to be active in policing transfer pricing, and the additional tax yield of over £1bn will no doubt suggest that HMRC should continue to invest resources in enquiries. As HMRC acknowledges, the yield varies year on year due to the effects of a small number of very large cases. While the yield is significantly higher than the previous year, it is lower than 2009, as a result it is difficult to judge if HMRC is getting better at targeting appropriate cases and working them more effectively. It is clear, though, that enquiries do not last indefinitely, and HMRC have been successful in almost entirely eliminating very old cases and bringing the duration of the experience down to less than two years. The contribution from Local Compliance remains stable, and shows that transfer pricing is not just an issue for the largest multinationals.
“Transfer pricing disputes generally arise from difficulties in determining appropriate arm’s length pricing within the context of the group arrangements. One way in which corporates can reduce the risk around their transfer pricing arrangements is to agree them in advance with the tax authorities. Such arrangements are becoming more commonplace as HMRC are streamlining the process of agreeing them. Today’s statistics show that the time taken to reach an ‘Advance Pricing Agreement’ has reduced by almost six months to just under 17 months. Such an improvement is highly commendable and helps to meet business demands for certainty within a reasonable time-frame. HMRC also offers a good service in helping taxpayers eliminate double taxation which arises through transfer pricing adjustments made by HMRC or a treaty partner, as evidenced in the numbers of cases resolved under the Mutual Agreement Procedure.”
For further information please contact:
Margot Cowhig, KPMG Corporate Communications
Tel: 0207 694 4246 Mobile: 07920 274856: firstname.lastname@example.org
KPMG Press Office: 0207 694 8773
Notes to editors
KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with over 11,000 partners and staff. The UK firm recorded a turnover of £1.7 billion in the year ended September 2011. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 152 countries and have 145,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. KPMG International provides no client services.