HM Revenue and Customs (HMRC) published their latest annual transfer pricing and diverted profits tax (DPT) statistics covering the year ended March 31, 2024 (FY 2023-2024).
- The statistics show HMRC continues to be very active on transfer pricing initiatives with the headline transfer pricing yield number increasing to £1.79 billion (up from £1.64 billion in FY 2022-2023), the second highest yield reported over the past six years. In addition, the large business annual report shows £13.8 billion tax under consideration for “international” as of March 31, 2024, so there is still a significant pipeline.
- The statistics also reported £4.5 billion in total tax under consideration as of March 31, 2024, in relation to 74 ongoing HMRC DPT reviews (including cases in which taxpayers have registered under the profit diversion compliance facility (PDCF)). This figure stood at £2.6 billion from 90 reviews as of March 31, 2023, and £2.4 billion from around 100 reviews as of March 31, 2022. So there has been a dramatic increase of some £1.9 billion, despite a decline in the number of ongoing reviews. The statistics also show that the PDCF is viewed by HMRC as “very successful” with an average time taken of 21 months from the registration meeting and £830 million of revenue generated by HMRC since its introduction in January 2019.
- The numbers of advance pricing agreements (APAs) settled have returned to more typical levels with the 27 APAs agreed during the year representing the highest since 2018 / 2019. The increased interest of businesses in applying for new APAs continues despite the long timelines reported in the statistics (although the timelines still compare favorably to the average duration of a transfer pricing inquiry followed by mutual agreement procedure (MAP)).
- HMRC is successfully reducing their inventory of transfer pricing and profit attribution MAP cases. Fewer MAP cases were resolved in FY 2023-2024 compared to the previous two years, but this was consistent with a smaller number of newly admitted MAP cases.
- HMRC’s advance thin capitalization agreement (ATCA) program has been in decline since the corporate interest restriction rules came into effect. However, there were 10 ATCAs agreed in FY 2023-2024 which was double the number agreed in the previous year and the average time taken of 37 months was a marked improvement on the last few years.
Read a February 2025 report prepared by the KPMG member firm in the United Kingdom