Challenges to transfer pricing under discovery assessments

There has been an increase in UK transfer pricing risk assessment queries and audits across all industries with HMRC’s Transfer pricing statistics: 2013 to 2014 confirming that £5.8bn has been raised in transfer pricing adjustments since the inception of the HMRC’s transfer pricing group in 2008.

For taxpayers one of the first issues to address in mitigating the risk of a transfer pricing assessment is to take steps to minimise the number of years open to challenge. This article revisits the legislation case law and HMRC practice relating to ‘discovery assessments’ and applies that statute to specific transfer pricing situations drawing conclusions for taxpayers.