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Transfer pricing assessments

Helping your international business assess arms-length relationships and tax risks

Transfer pricing assessments

Transfer pricing assessments:

A critical issue for global businesses

Transfer pricing is increasingly in the spotlight with tax jurisdictions focusing on cross-border transactions in an attempt to clamp down on abuse and compliance weakness.

In fact, the amount of tax under dispute because of HMRC investigations in this area is at an all-time high – £5.8bn – and catching up with businesses not meeting their obligations is a real priority for the government. 

But what does transfer pricing really mean? It refers to the pricing of transactions between related parties, covering such diverse areas as goods and services, intangible property, and loans between associated companies.

Who needs to put a policy in place?

All businesses operating internationally, or even just in the UK, need to consider transfer pricing policies. These should state the prices to be paid, agreements made and justifications for both – which means serious economic analysis.

UK transfer pricing rules are modelled on the standards developed by the OECD. The business is responsible for developing and maintaining documentation to support the transfer pricing methodology used and the actual prices applied to associated company transactions.

Recent work in this area

At Price Bailey, we have considerable experience with transfer pricing. Our recent work includes:

  • Assisting a multinational group with a transfer pricing study, covering policies, benchmarking and putting suitable agreements in place. These covered management services, equipment rental equipment and inter-company loans.
  • Assisting a US-based oil company on a benchmarking study, as well as adopting consistent transfer pricing policies on a group-wide basis.
  • Preparing a transfer pricing report for an Indian multinational on group-wide charges for senior management services across a number of different jurisdictions
  • Advising an international fund on the appropriate methodology for internal pricing and cost-splitting including benchmarking, analysis and ultimately preparing the tax computations for the UK : Singapore transfer pricing adjustments required for their local filings.

Our expert advisers can help

By carrying out comprehensive transfer pricing assessments, we can help you establish, justify and continually evaluate your inter-company transactions and relationships, making sure they are conducted at arms-length and reducing any tax risk.

Our service can include:

  • Reviewing the tax implications of transfer pricing transactions
  • Reviewing your international market entry or evolution strategy
  • Pinpointing your UK transfer pricing obligations
  • Considering methods of comparability
  • Assessing whether existing policies are appropriate
  • Determining whether you are charging an arms-length price
  • Creating a transfer pricing report on the functions and risk analysis
  • Recommending new policies and agreements
  • Implementing new transfer pricing documentation
  • Benchmarking existing policies to keep the business tax compliant
  • Valuing all cross-border or inter-company functions, risks and responsibilities
  • Analysing competitor margins and the potential benefits of outsourcing

Get in touch.

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