According to HMRC statistics released last week, HMRC recovered £1.1bn tax from transfer pricing enquiries during 2013/14, which HMRC said was double the tax take of the previous year.
HMRC said it ‘successfully challenged the prices charged between companies in the same multinational group for goods and services’ and ‘examined profit calculations under OECD transfer pricing rules to ensure there was no manipulation and the right amount of tax was paid’.
Financial secretary to the Treasury David Gauke hailed HMRC’s extra tax collection as the result of ‘[giving] HMRC additional funding to challenge multinational groups to ensure the rules are followed and the right tax paid [and] going further to ensure multinationals pay their fair share’. He pointed out that an extra £5.8bn in tax has been secured by the specialist HMRC group that examines pricing within multinationals since it was established in 2008. He added: ‘From April, multinationals will face a 25% tax on profits generated in the UK which they then shift out of the country to avoid paying UK tax.’
The published figures reveal that the yield from transfer pricing enquiries has fluctuated from year to year. The yield in 2013/14 (£1,137m) was indeed more than double the yield for 2012/13 (£504m). However, in 2011/12, the yield was £1,095m; in 2010/11, HMRC recovered £436m; and in 2009/10, the figure was £1,039m. The yield stood at a peak of £1,595m in 2008/09.
The average time for HMRC to close a transfer pricing dispute has decreased, but remains longer than many tax directors would like. The average age of open transfer pricing enquiries at 31 March 2014 was 18.5 months (down from 24.8 months at 31 March 2010). In the 12 months to 31 March 2014, the average age of settled enquiries was 25.3 months (down from 33.3 months for the 12 months to 31 March 2010), with half of all transfer pricing enquiries settled within 21 months (compared with 31 months for the 12 months to 31 March 2010).
According to HMRC statistics released last week, HMRC recovered £1.1bn tax from transfer pricing enquiries during 2013/14, which HMRC said was double the tax take of the previous year.
HMRC said it ‘successfully challenged the prices charged between companies in the same multinational group for goods and services’ and ‘examined profit calculations under OECD transfer pricing rules to ensure there was no manipulation and the right amount of tax was paid’.
Financial secretary to the Treasury David Gauke hailed HMRC’s extra tax collection as the result of ‘[giving] HMRC additional funding to challenge multinational groups to ensure the rules are followed and the right tax paid [and] going further to ensure multinationals pay their fair share’. He pointed out that an extra £5.8bn in tax has been secured by the specialist HMRC group that examines pricing within multinationals since it was established in 2008. He added: ‘From April, multinationals will face a 25% tax on profits generated in the UK which they then shift out of the country to avoid paying UK tax.’
The published figures reveal that the yield from transfer pricing enquiries has fluctuated from year to year. The yield in 2013/14 (£1,137m) was indeed more than double the yield for 2012/13 (£504m). However, in 2011/12, the yield was £1,095m; in 2010/11, HMRC recovered £436m; and in 2009/10, the figure was £1,039m. The yield stood at a peak of £1,595m in 2008/09.
The average time for HMRC to close a transfer pricing dispute has decreased, but remains longer than many tax directors would like. The average age of open transfer pricing enquiries at 31 March 2014 was 18.5 months (down from 24.8 months at 31 March 2010). In the 12 months to 31 March 2014, the average age of settled enquiries was 25.3 months (down from 33.3 months for the 12 months to 31 March 2010), with half of all transfer pricing enquiries settled within 21 months (compared with 31 months for the 12 months to 31 March 2010).
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