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Fall in transfer pricing investigations

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The number of HMRC investigations into suspected tax avoidance involving transfer pricing fell by 15% between 2013/14 and 2014/15, from 450 to 391, according to UHY Hacker Young. This appears to be a reflection of HMRC’s success in clamping down on abusive transfer pricing, leading companies to become less aggressive in their tax planning, suggests tax partner Roy Maugham. ‘HMRC’s clampdown on companies it suspects of avoiding UK tax through manipulation of transfer pricing methods appears to be working’, he said.

Furthermore, companies may now be less willing to risk reputational damage. ‘With the press prone to naming and shaming, companies are increasingly concerned about the effect negative public opinion can have on their reputation and, ultimately, revenues’, Roy Maugham added.

Another factor may be the reduction in the corporation tax rate to 20%. As Roy Maugham explains, ‘Due to the increasingly favourable UK corporation tax rate, it may be the case that some companies are less driven to actively look for ways to avoid paying their tax’.

Issue: 1312
Categories: News