UK and International Tax news

HMRC Transfer Pricing Statistics Issued

Friday 23rd December 2011

HMRC have recently issued the latest statistics in relation to transfer pricing enquiries, advance pricing agreements [APAs] and mutual agreement procedure [MAP] cases.

With regard to transfer pricing enquiries, the tax yield increased from £519m in 2007/08 to £1,595m in 2008/09, falling back to £1,039m in 2009/10 and to £436m in 2010/11.  HMRC have confirmed howeve,r that at the mid year point in 2011/12, the tax yield has significantly exceeded the total yield for 2010/11.  They comment that the fluctuations in the level of yield from one year to the next are principally due to the effects of a small number of very large cases.

HMRC also point out that whilst most of the tax raised in each year has come from the ‘large business service’ category, i.e. largest multinationals, tax raised from ‘local compliance’ or smaller multinationals has actually increased from £25m in 2007/08 to £163m in  2010/11 which suggests increasing attention is being paid to those smaller multinationals.

Average enquiry times have fallen from 36 months to 24 months, with 90% of cases open as at 1 April 2008 having been settled as at 31 March 2011.

In relation to APAs, 32 applications were made in 2009/10 and 49 in 2010/11 with the average time to reach agreement being around 20-23 months.

Advance thin capitalisation agreements on hand at 31 March 2011 numbered 173 and the average time to reach agreement was approximately ten months.

MAP cases involving the elimination of double taxation arising from transfer pricing adjustments made by HMRC were taking an average 27 months to resolve although HMRC point out that these require negotiation with other administrations which can impact on the time taken to reach agreement.

If you would like further details on the above, please contact Keith Rushen on 0044 (0)20 7486 2378.

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