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Transfer pricing is the UK tax dispute

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According to the international law firm Pinsent Masons, the amount of tax that potentially underpaid large corporations by removing profits to other jurisdictions, increased by 60 percent last year, to GBP3.8bn (USD4.8bn).

This number is “a tax for consideration” by HMRC’s Large Business Directorate HMRC, which does calculations of the most potential additional tax liability on all open requests before any investigations are completed.

The specialist in the tax matters Heather Self of Pinsent Masons told that such increase offered management of HMRC that opened a significant amount of new requests within the last twelve months, in particular, in the field of affairs of transfer pricing of multinational corporations. She assumed that transfer pricing becomes the unique biggest risk or a source of potential tax errors for the large companies.

“It seems that financial management on new looks at the largest companies of Great Britain, being accented on intra group, cross-border transactions”, she told. “Possibly, there will be a reaction to increase in emphasis of attention of OECD and the EU concerning the international taxation, and it allows to assume that HMRC becomes more courageous in case of the challenged amount of profit which shall be allocated for economic activity of Great Britain”.

“HMRC invests the capital in specialists in transfer pricing, and it is quite clearly reflected in numbers”, she told.

Heather Self said that the introduction of the redirected income tax of 2015 which aims to guarantee appropriate levels of a payment of multinational corporations of a tax in Great Britain could be a stimulator for increase in tax investigations in HMRC.

Author: Sergey Panov
managing partner Finance Business Service