HMRC Urges Rigorous Analysis for Transfer Pricing Compliance

Multinational groups should conduct rigorous value chain analysis for their UK entities to accurately reflect financial transactions and ensure compliance with transfer pricing rules, the UK tax authority said Thursday.

Such analysis, while not mandatory, is an important tool to understand how value is created across multinational enterprises, His Majesty’s Revenue and Customs said in its monthly agent update.

“Value chain analysis helps clarify the economically significant functions, assets, and risks within a group,” HMRC said, and it encouraged businesses to apply such analysis “rigorously and contemporaneously, especially where the UK entity plays a strategic role in value creation.” ...