UK introduces new requirements for TP documentation

The UK has always had a broad documentation requirement. However, in the area of transfer pricing, there were no specific documentation requirements in the past. This created uncertainty for UK-based multinational companies, leading to an inconsistent approach. As of April 1, 2023, the recommendations from the BEPS Action 13 Final Report will be followed (OECD approach). There will be a standard approach to TP documentation, consisting of the following component:

  • Master file: A file containing standard data that is relevant to all group members of multinational companies;
  • Local file: A file that refers specifically to the local taxpayers’ material transactions; and
  • Country-by-Country Report (‘CbCR’): Aggregated data on the worldwide allocation of income, profit, taxes paid and economic activity to the corresponding tax jurisdiction from the largest multinational enterprise groups.

The minimum standard for the CbCR was already implemented by the UK, but the requirements for the master file and the local file are new.

In addition to the new standard approach to TP documentation, a summary audit trail (SAT) requirement will be introduced. This is a questionnaire about the main actions in preparing the TP local file, which must be completed.

Taxpayers have 30 days to provide the master file, local file and SAT when requested by the HRMC. Do you want to be well prepared to these new regulations? Schedule a demo and discover how the Coperitas solution can help you draft and maintain your TP documentation in an efficient manner.