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HMRC restarts profit diversion facility

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HMRC has confirmed that its profit diversion compliance facility (PDCF) is open and available to all multinationals (MNEs), having been paused in the earlier stages of the coronavirus pandemic. Launched in January 2019, the PDCF gives MNEs using arrangements likely to be targeted by diverted profits tax (DPT) the opportunity to disclose any additional UK tax liabilities from past accounting periods. The CIOT notes that, where an MNE uses the facility to put forward a report with proposals to pay any additional tax, interest and penalties, this will be deemed an ‘unprompted’ disclosure for penalty calculation purposes.

In September, HMRC restarted writing to specific MNEs suspected of potentially being within the scope of DPT, highlighting the benefits of registering for and using the PDCF and giving the MNE 90 days to respond. For the majority of businesses which fail to register, HMRC says that it follows up immediately with investigations.

HMRC has already completed over 80 DPT investigations, with around 100 more underway.

The CIOT has issued guidance to help members provide advice on how to respond if a client receives a PDCF letter from HMRC suggesting that they review their cross-border arrangements.

Issue: 1504
Categories: News