UK tax authority, HMRC, released a transparency data report covering statistics on transfer pricing and Diverted Profits Tax through the end of the 2023-24 tax year on 27 January 2025.

The report contains data on the following:

Transfer pricing

The UK’s transfer pricing rules set out how transactions between connected parties are priced for tax purposes. This includes transactions between companies in the same group. The rules ensure that the UK can tax its share of profits in accordance with the internationally recognised transfer pricing principle (known as the arm’s length principle).

HMRC challenges arrangements that do not allocate the right amount of profits (the arm’s length amount) to the UK.

Transfer pricing yield

The transfer pricing yield figures include additional tax revenue from enquiries (including real time interventions), Advance Pricing Agreements (APAs), Advance Thin Capitalisation Agreements (ATCAs) and transfer pricing Mutual Agreement Procedure (MAP) cases.

Enquiries (including real-time interventions)

Number of enquiry cases (including real-time interventions) settled from the 2018 to 2019 tax year to the 2023 to 2024 tax year

Average age of settled enquiries from the 2018 to 2019 tax year to the 2023 to 2024 tax year

Staff working on international tax issues

In 2023 to 2024 there were 395 (397 in 2022 to 2023) full-time equivalent staff working on international tax issues involving Multinational Enterprises (MNEs) including transfer pricing, DPT, Controlled Foreign Companies (CFCs), and cross border debt.

This figure includes time spent on international tax issues by dedicated international tax specialists, Corporation Tax (CT) specialists, and policy and technical advisers.

These staff work with other expert industry and tax specialists to tackle issues that represent a substantial risk of tax loss to the Exchequer in line with HMRC’s ‘resource to risk’ compliance policy.

Advance Pricing Agreements

An APA is a written agreement between a business and HMRC which determines the appropriate transfer pricing method to be applied to certain transactions for a set period of time. APAs are recognised as international best practice by the OECD in managing compliance with transfer pricing rules.

They help tax authorities, including HMRC, to establish early on how transfer pricing rules apply to complex cross-border transactions. They provide multinational businesses with greater certainty about their tax liabilities so that they pay the right amount of tax at the right time and help to ensure that a business does not pay tax more than once on the same profits. An APA does not provide any special treatment or change the amount of tax due under the law.

A Statement of Practice explains how HMRC applies the APA legislation and operates the UK APA program. The UK constantly reviews its application of the APA legislation and updated the Statement of Practice in October 2023. The UK’s approach is primarily to work with the tax administrations of other countries to make bilateral or multilateral agreements rather than unilateral agreements. This requires discussion and negotiation with treaty partners which impacts on the time taken to reach agreement.

This year HMRC has agreed 27 APAs.

Mutual Agreement Procedure

Most double taxation agreements include a MAP article allowing tax administrations to resolve cases of double taxation by consultation and mutual agreement.

A Statement of Practice 1/2018 and guidance in the International Manual outline HMRC’s procedure in relation to the elimination of double taxation under MAP. The majority of cases require HMRC to work with tax administrations in other countries to determine each country’s taxing rights, which affects the time needed to resolve these cases.

MAP applies to other issues as well as transfer pricing. The figures reported here cover transfer pricing and permanent establishment profit attribution issues only.

This year HMRC has resolved 86 MAP cases.

Advance thin capitalisation agreements

An ATCA is an agreement between a business and HMRC which sets out how the transfer pricing rules apply to funding issues, including the appropriate levels, terms, and conditions of debt financing between connected parties, so that the UK receives the right amount of tax at the right time.

An ATCA is a form of APA and, like APAs in general, it enables tax authorities to examine certain transactions and agree the appropriate transfer pricing position earlier than the usual tax return/assessment cycle would allow. It does not change the amount of tax a business must pay.

Statement of Practice 1/2012 explains HMRC’s approach. Detailed practical guidance is contained in the international manual at INTM520000.

Diverted Profits Tax

DPT is designed to encourage large companies that try to minimise their tax liabilities through the use of contrived arrangements to change their behaviour and pay additional CT, or face paying tax at a higher rate. It is not targeted specifically at any particular sectors or companies, but rather at particular behaviours and arrangements.