Rise in transfer pricing tax demands but fines slump

Data obtained by LCN Legal under the Freedom of Information Act suggests that HMRC have been taking a light-touch approach to transfer pricing cases with penalties for non-compliance with the UK rules either so small as to be non-disclosable or otherwise zero in three out of the last five tax years. Figures for interest charged however show an increase in 2023/24 suggesting that the amount of tax owed in these cases has been rising.

Paul Sutton Partner at LCN Legal commented: ‘These numbers are surprising. We are seeing more big-ticket transfer pricing challenges by the US and the European Union yet HMRC is pursuing a light touch approach.

‘HMRC prefer to maintain open discussions with businesses throughout the enquiry process with the emphasis on negotiation rather than punitive measures. The UK tax authority also recognises that the complexity of transfer pricing...