United Kingdom

Transfer Pricing Cube 

Get on track with automating your transfer pricing methodology
Trains on track
Tax authorities’ method of auditing transfer pricing has changed from concentrating on methodology to focusing on implementation.

 

This makes it more important than ever to ensure your agreements are being correctly implemented and controlled. A good methodology, well documented Advance Pricing Agreements and other transfer pricing documentation may no longer be sufficient if you have not ensured a controlled implementation supported by robust systems, processes and controls. Errors or gaps in your transfer pricing implementation can cause substantial financial costs and damage to your reputation and risk profile with HMRC, so it is essential to ensure these issues are managed properly. It is also becoming increasingly important for companies with complex structures or transfer pricing agreements to be able to accurately model the effect of business or methodology changes on their transfer pricing position. Business decisions may often be made without due consideration to transfer pricing, and as these amounts are often significant, early identification of any transfer pricing implications could be hugely beneficial.

Our Approach

We initially analyse your existing systems and processes, reporting, functionality and modelling requirements by meeting with the relevant stakeholders. Transfer Pricing Cube solution has been designed so that it can be embedded simply, quickly and cost effectively into your overall system. At the start of any implementation we always upload your prior period data into a TP Cube file and generate outputs to reconcile against your historic data. Once this proof of concept phase is complete we will hand over the TP cube file to you with your transfer pricing methodology programmed in and ready for your new data to be imported.

 

Once implemented TP Cube can be used to perform various functions:

 

Data Collection

  • ·Automated upload and effective maintenance of allocation keys.
  • Data reconciliation, verification and exception reporting functionality at the point of data upload.

 

Cost Allocation

  • Allocation and classification of data (e.g. by function and recipient) via appropriate allocation key.
  • Calculation of transfer pricing amounts using agreed methodology.

 

Invoicing

  • Automation of invoices for recipient entities and other reporting functionality as required. A wide range of other reports can also be configured, ensuring a visible and auditable data trail.

 

Archiving

  • Establishment of an electronic audit file (containing data supporting the circulation) with drill down and audit trail facilities. This also permits year on year comparisons.

 

Modelling

  • Using a real set of transfer pricing data as a basis for carrying out “what if” scenario modelling as required. Intuitive functionality helps ensure that complex scenarios can be modelled accurately in a short time frame.

The Potential Benefits

TP Cube provides a robust method to help manage, interrogate and model your transfer pricing calculation process. Automation of the data sourcing and calculation processes can free up valuable time for staff to concentrate on more value added activities. From a S-O 404 and audit perspective, the tools can help provide a transparent and consistent process to help assure tax authorities that you are effectively managing your transfer pricing issues.

 

The tool is a transparent solution which enables users to view an audit trail and detailed reports on current period and trend analysis data, enabling queries to be answered swiftly and giving management access to a wide range of graphical and tabular reports. The calculation tools can help provide recipient entities with a detailed breakdown of the charges received. This can prove invaluable in discussions with auditors and tax authorities and assist in the defence of charges to local fiscal authorities in recipient countries. This in turn can help improve the deductibility of recharged costs.

Contact us

 Jonathan Cobb KPMG in the UK

Jonathan Cobb

Director

KPMG in the UK
020 7311 8723

email Jonathan

 

Kaz Yousaf

 

Assistant Manager

KPMG in the UK

0151 473 5202

email Kaz