UK: Updated guidance on profit diversion compliance facility
HMRC published guidance clarifying an expanded scope and rebrand for their profit diversion compliance facility.
june 25, 2026
HMRC on June 17, 2026, published updated guidance for their profit diversion compliance facility (PDCF), which has now been rebranded as the transfer pricing & profit diversion compliance facility (TP&PDCF).
Key features of the updated guidance are:
- Reflecting the replacement of the diverted profits tax (DPT) with the unassessed transfer pricing profits (UTPP) regime for periods beginning on or after January 1, 2026.
- Expansion of the PDCF to other arrangements that may significantly reduce UK profits below the arm’s length amount (excluding loan relationships and deemed loan relationships as per previous PDCF criteria). The updated guidance makes clear that the TP&PDCF can include arrangements involving a profit attribution analysis applied to permanent establishments too.
The updated guidance clarifies other options:
- The transfer pricing compliance route for simple or straightforward errors warranting voluntary disclosure
- An advance pricing agreement (APA) when there is considerable difficulty in determining the method by which the arm’s length principle should be applied.
Read a June 2026 report prepared by the KPMG member firm in the UK
For more information, contact a KPMG tax professional in the UK:
Nick Stevart | nick.stevart@kpmg.co.uk
Phil Roper | phil.roper@kpmg.co.uk