UK: HMRC transfer pricing and diverted profits tax statistics for year ended 31 March 2022

Annual transfer pricing and diverted profits tax statistics released by HMRC

Annual transfer pricing and diverted profits tax statistics released by HMRC

HM Revenue & Customs (HMRC) released annual transfer pricing and diverted profits tax (DPT) for the year ended 31 March 2022 (FY22).

The statistics provide valuable insights into how HMRC is addressing transfer pricing compliance risks both domestically and internationally. The latest data published show some interesting trends:

  • The transfer pricing yield fell by 31% to £1,482 million, which is likely to be at least in part due to a reduced impact from the resolution of major diverted profits investigations.
  • HMRC also collected £198m of net DPT, the highest reported since FY18, and there were a further 100 ongoing DPT investigations at the end of March 2022 where the total amount of tax under consideration was £2.4 billion.
  • HMRC settled 175 transfer pricing cases (including real time interventions), a significant increase on previous years, and the average time to settle those cases was 34 months.
  • The data on the Profit Diversion Compliance Facility (PDCF), launched by HMRC in January 2019, continues to demonstrate the success of this initiative in resolving cases and the benefits for taxpayers as an accelerated route to resolution of UK transfer pricing issues.
  • HMRC resolved 131 transfer pricing and profit attribution mutual agreement procedure (MAP) cases taking an average of 21 months—this is a significant change versus prior years and a notable success for HMRC.
  • There were 40 new applications for advance pricing agreements (APAs) made, the largest number seen since FY16 and this is even more encouraging as we expect that, unlike FY16, these will be materially all bilateral or multilateral APAs.
  • The average time taken to agree on APAs remains an area of concern with the 20 cases agreed in FY22 taking almost five years on average but there are a number of important international developments, in which HMRC have played an important role, which are intended to improve the effectiveness of future APA processes.

Read a February 2023 report [PDF 501 KB] prepared by the KPMG member firm in the UK


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