HMRC transfer pricing investigations up nearly half

HMRC transfer pricing investigations up nearly half

HMRC investigations into transfer pricing rise 47%

INVESTIGATIONS into multinational companies’ use of transfer pricing have leapt up 47%, with £1bn of taxes under HM Revenue & Customs’ spotlight.

The figure is up from £680m last year, as the Revenue cracks down on businesses using the method to drive down their tax bills, according to law firm Pinsent Masons.

Transfer pricing sees multinational corporations’ value goods and services moving across international borders from one corporate entity to another. These transactions often see a corporation’s global tax costs driven down.

In recent months, multinationals including Amazon, Google and Starbucks were accused of using the method to dramatically reduce their UK tax rates, culminating in their appearance before Public Accounts Committee to answer questions on the matter.

Pinsent Masons partner Heather Self said the figures show HMRC “is taking an increased interest in where multinationals with UK operations pay their taxes”.

“With increased pressure from the government to bring in more revenue, and more resources to investigate potential avoidance and evasion, HMRC has been investigating more and more tax payments,” said Self. “This doesn’t necessarily mean there is more avoidance or evasion taking place, but that HMRC is being more thorough with its investigations.”

She did, however, add that law changes on transfer pricing may not necessarily help.

She said: “The UK has to accept that it cannot change the law on transfer pricing or the taxation of revenues unilaterally. There is already a tax on turnover in the UK and it’s called VAT. EU law does not allow the UK to create new turnover taxes.”

In a statement, an HMRC spokesman said: “We are bringing in more people and additional legal support to speed up our work identifying and challenging multinationals’ transfer pricing arrangements and to further strengthen our risk assessment capability across the large business sector.

“This in turn will help to ensure that multinationals do not shift profits out of the UK and pay the tax due in line with UK tax law.”

 

Whitepaper

The Future of Finance is in the CFO's Hands

Business The Future of Finance is in the CFO's Hands

4m
Save a Week a Month Consolidating Accounts

Accounting Software Save a Week a Month Consolidating Accounts

5m
Mitigating Risk Through Internal Control

Legal Mitigating Risk Through Internal Control

5m
Could tax season have run more efficiently?

Corporate Tax Could tax season have run more efficiently?

6m

Related Articles

R&D tax relief claims are rising, HMRC report reveals

Corporate Tax R&D tax relief claims are rising, HMRC report reveals

11m Emanuela Hawker, Reporter
Appropriate tax systems – taxation in the ‘Fourth Industrial Revolution’

Corporate Tax Appropriate tax systems – taxation in the ‘Fourth Industrial Revolution’

12m Jane Mackay, Crowe
Watch out when winding up

Corporate Tax Watch out when winding up

1y Emma Rawson, ATT Technical Officer
HMRC large business tax enquiry duration rises to 3 years

Corporate Tax HMRC large business tax enquiry duration rises to 3 years

2y Emma Smith, Managing Editor
Big names, little tax: Airbnb, Facebook, Kellogg’s, eBay

Corporate Tax Big names, little tax: Airbnb, Facebook, Kellogg’s, eBay

2y Alia Shoaib, Reporter
EU divided over radical tax reforms targeting tech giants

Corporate Tax EU divided over radical tax reforms targeting tech giants

2y Alia Shoaib, Reporter
How to educate your clients about tax avoidance

Corporate Tax How to educate your clients about tax avoidance

2y Clear Books | Sponsored
CGT clampdown nets HMRC £124m – but could lead to increase in use of avoidance schemes

Corporate Tax CGT clampdown nets HMRC £124m – but could lead to increase in use of avoidance schemes

2y Austin Clark, Reporter