More aggregation with a brighter spotlight on complex arrangements
Section A, which covers non-financial transactions, has been revised to introduce a more aggregated approach, and simplifications have been made in some areas. That said, more in-depth reporting is required in others.
Under HMRC’s original proposal from 2025, Section A required highly granular reporting of controlled transactions, with limited scope for aggregation unless key features matched exactly. For many groups, particularly those with high volumes of similar transactions, this would have translated into a large number of reportable line items and a significant compliance burden.
The revised consultation adopts a more pragmatic approach. Taxpayers will now be able to group transactions more broadly where they share the same TP policy, method, mark up or margin, and set of comparables. Within each type of aggregated transaction, only the top 10 counterparties by value must have additional disclosure of counterparty specific income or expense amounts and the key metrics for the TP method applied. This structure more closely mirrors how many groups already prepare local file documentation and should reduce duplication of data gathering efforts.
Additionally, Section A has also been amended to capture more targeted technical information. For example, for profit split arrangements, taxpayers must disclose the measure of profits to be split, the profit splitting factors, and the quantum of profits or losses being split. For transactions involving the transfer of intangibles, detail must be provided on the valuation methodology including discount and inflation rates used (where applicable), and detail on the actual intangible itself, including nature of the asset and useful economic life. These additions appear designed to give HMRC a faster and more accurate insight into some of the more complex TP policies. Other additional inputs, such as the tested party for one-sided TP methods, are also required.
Overall, while simplifications have been made in some areas, additional inputs are now required in others, arguably ‘netting off’ any intended reduction in the compliance burden.
A narrower but deeper focus on financing
In the revised design of Section B, similar to Section A, HMRC have narrowed the scope, while deepening the level of detail required. The original Section B contemplated extensive reporting on a wide range of intragroup financing arrangements above certain thresholds, which was likely to result in a significant administrative burden for taxpayers.
Detailed reporting, per the revised ICTS, is now only required for the top five debits connected with loan relationships (by P&L impact) and top five creditor relationships (by balance sheet value based on period average or closing balance). For each of these arrangements, however, taxpayers must provide an enhanced level of information than previously proposed, including credit ratings, relevant financial ratios, the use of funds, and key terms such as tenor, seniority, and currency. Derivative disclosure requirements have been (for the purposes of the 2026 excel template) separated out and are also limited to six lines of information based on greatest in-year P&L impact.
HMRC are therefore seeking fewer data points overall, but higher quality data on the financing arrangements that matter most from a risk perspective, enabling a more informed first level risk review.
Qualitative information – easy identification of ‘triggers’ for HMRC
The narrative questions previously included in Section C remain largely unchanged but have now been presented differently – requested over two tabs (in the 2026 excel template) including ‘Identifying Information’ and ‘Supplementary Questions’.
A few additional questions have been included with respect to costs excluded from the cost bases of the TP methodologies applied – such as share based payment accounting charges, tax deduction charges, and defined benefit pension costs. It would appear HMRC are using these questions to flag upfront common mistakes made when assessing the cost base of many transactions.
The unchanged questions, such as identifying any transfers in intangibles, business restructurings or changes in TP policies, also allow for easy identification as to the areas arguably most interesting for HMRC. Where a transfer of an intangible asset has taken place, further detail on the valuation is also required.
Banking groups - optional ‘business line’ approach
The consultation acknowledges that a transaction by transaction template is poorly suited to financial services businesses, where intra group dealings are often high volume, complex and managed at a portfolio or book level. To address this, HMRC propose a ‘business line’ approach for certain financial services activities, allowing aggregation of transactions at a business line level and reporting that better reflects how those businesses manage and monitor their intercompany arrangements.
A separate Section A(i) and Section B(i) have been developed for certain businesses in the financial services sector. For affected taxpayers, the revised design should be more practical than the previously generic template, although the underlying ICTS requirement remains demanding.
