Transfer Pricing statistics: 2013 to 2014
Published 6 March 2015
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This publication is available at https://www.gov.uk/government/publications/transfer-pricing-statistics-2013-to-2014/transfer-pricing-statistics-2013-to-2014
The UK’s Transfer Pricing rules[footnote 1] set out how the pricing of transactions between connected parties is dealt with for tax purposes and, in common with most other countries, is based on the internationally recognised ‘arm’s length principle’.
In 2008 HM Revenue and Customs (HMRC) introduced an approach to transfer pricing enquiries involving:
- greater specialisation and team work
- a focus on issues of higher risk
- action plans for enquiries agreed where possible with companies
- active monitoring of progress
Since its creation 2008, this group has secured £5.8 billion in additional tax from challenging the transfer pricing arrangements for multinational companies. At the end of the first quarter of 2008, the average time taken to settle an enquiry was 38 months and the average age of open enquiries was 32 months.
Significant progress has been made since that date - as at 31 March 2014 over 99% of cases open as at 1 April 2008 had been settled.
1. Time taken to resolve enquiries
1.1 Age of open enquiries
| 31/03/2010 | 31/03/2011 | 31/03/2012 | 31/03/2013 | 31/03/2014 | |
|---|---|---|---|---|---|
| Average age of open enquiries (months) | 24.8 | 19.2 | 20.8 | 18.6 | 18.5 |
| 50% open less than (months) | 16.2 | 12.4 | 15.4 | 15.4 | 15.3 |
1.2 Age of settled enquiries
| 12 months to: | 31/03/2010 | 31/03/2011 | 31/03/2012 | 31/03/2013 | 31/03/2014 |
|---|---|---|---|---|---|
| Average (months) | 33.3 | 29.4 | 26.1 | 24.6 | 25.3 |
| 50% settled within (months) | 31.0 | 25.7 | 17.7 | 20.6 | 21.0 |
2. Transfer Pricing Yield
| 2007 to 2008 | 2008 to 2009 | 2009 to 2010 | 2010 to 2011 | 2011 to 2012 | 2012 to 2013 | 2013 to 2014 | |
|---|---|---|---|---|---|---|---|
| Total Amount | £519 million | £1,595 million | £1,039 million | £436 million | £1,095 million | £504 million | £1,137 million |
| Large Business Service | £494 million | £1,564 million | £973 million | £273 million | £944 million | £251 million | £831 million |
| Local Compliance | £25 million | £31 million | £66 million | £163 million | £151 million | £253 million | £306 million |
3. Advance Pricing Agreements (APAs) statistics - year ending 31 March 2014
HMRC has run an APA Programme since 1999 to assist businesses in identifying solutions for complex transfer pricing issues.
Statement of Practice 2/2010 provides comprehensive guidance on how HMRC interprets the APA legislation and applies it in practice.
| 2009 to 2010 | 2010 to 2011 | 2011 to 2012 | 2012 to 2013 | 2013 to 2014 | |
|---|---|---|---|---|---|
| Applications made | 32 | 49 | 32 | 45 | 43 |
| Applications turned down | 3 | 1 | 0 | 0 | 0 |
| Applications withdrawn | 2 | 2 | 1 | 4 | 9 |
| APAs agreed during year | 20 | 35 | 32 | 27 | 29 |
| Average time to reach agreement (months) | 20.3 | 22.7 | 16.9 | 26 | 27.8 |
| 50% agreed within (months) | 16.5 | 14 | 10.7 | 15 | 19.7 |
Interest in the APA programme remains high. HMRC recommends that any enterprise interested in applying for an APA contacts HMRC first to informally discuss its plans before presenting a formal application.
Elapsed times are measured from the date the formal APA application is received to the date the agreement is signed by all relevant parties.
4. Advance Thin Capitalisation Agreements (ATCAs) statistics - year ending 31 March 2014
Although ATCAs come within the APA legislation, the ATCA process is administratively separate. All ATCAs are unilateral.
Statement of Practice 1/2012 gives a thorough explanation of HMRC’s approach. Detailed practical guidance is contained in the international manual.
| 2010 to 2011 | 2011 to 2012 | 2012 to 2013 | 2013 to 2014 | |
|---|---|---|---|---|
| ATCAs agreed | 127 | 160 | 144 | 198 |
| Agreements in force | 231 | 279 | 414 | 510 |
| Average time to reach agreement (months) | 9.8 | 10.1 | 11.7 | 11.4 |
| 50% agreed within (months) | 6.9 | 7.7 | 9.7 | 10.4 |
5. Mutual Agreement Procedure (MAP) statistics for 2012 to 2014
Statement of Practice 1/2011 outlines HMRC’s procedure in relation to the elimination of double taxation under MAP and/or the EU Arbitration Convention. As with APAs, the majority of cases require negotiation with other tax administrations, which can impact the time taken to reach agreement.
| 2009 to 2010 | 2010 to 2011 | 2011 to 2012 | 2012 to 2013 | 2013 to 2014 | |
|---|---|---|---|---|---|
| Cases resolved | 45 | 40 | 46 | 47 | 46 |
| Cases admitted | 51 | 39 | 45 | 40 | 61 |
| Average time to resolve cases (months) | 24 | 27 | 23 | 21 | 29 |
| 50% resolved within (months) | 21 | 19 | 21 | 13 | 20 |
The increase in resolution times in 2013 to 2014 reflects the successful settlement of 5 of the oldest and most difficult cases. If these are excluded, the average elapsed time becomes 21 months.
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Part 4 Taxation (International and Other Provisions) Act 2010 for accounting periods ending on or after 1 April 2010, Schedule 28AA Income and Corporation Taxes Act 1988 for prior periods. ↩