HMRC has updated its international manual with new guidance and a sample agreement for a unilateral APA programme covering UK entities’ participation in development cost contribution arrangements.
The UK HM Revenue & Customs (HMRC) has updated its International Manual to include guidance from 19 June 2025 and a sample agreement for a new unilateral Advance Pricing Agreement (APA) programme concerning Development Cost Contribution Arrangements (CCAs).
The update follows the UK Government’s announcement in the Spring Statement of plans to provide certainty over the validity of a UK entity’s participation in a Development CCA using the existing APA framework.
Published in June 2025, the HMRC guidance confirms that the scope of the unilateral APA will not extend to measuring or pricing contributions under a CCA. Instead, the APA will cover the contractual basis for a UK entity’s participation, using an alternative commercial viability test rather than the OECD’s control of risk standard.
The move responds to long-running HMRC enquiries into the participation of UK entities in CCAs, which have faced scrutiny under section C.2 of Chapter VIII of the OECD Transfer Pricing Guidelines. According to those guidelines, valid participants must control the specific development-related risks they assume.
HMRC’s new approach offers an alternative for multinational groups—especially those with R&D-intensive activities—seeking greater certainty. Groups with existing Development CCAs, regardless of whether they are currently under enquiry, may apply for the new APA. HMRC is also open to extending APA terms beyond five years in line with the duration of relevant development projects.
