Business Services, Business Tax

Upcoming Changes to Transfer Pricing Rules: What SMEs Need to Know

By RJP LLP

Upcoming Changes to Transfer Pricing Rules: What SMEs Need to Know

HMRC has launched a consultation on proposed changes to the UK’s transfer pricing rules, which could significantly impact small and medium-sized enterprises (SMEs) engaged in cross-border transactions.

Key Proposals

1. Reform of the SME exemption: Currently, many SMEs are exempt from applying transfer pricing rules. HMRC proposes to narrow this exemption, potentially removing it for medium-sized enterprises. This change aims to align the UK more closely with international standards and protect the UK tax base.

2. Introduction of the International Controlled Transactions Schedule (ICTS): HMRC plans to require businesses to report cross-border related-party transactions through a new ICTS. This schedule would help HMRC identify transfer pricing risks more effectively.

Implications for Your Business

• Increased compliance requirements: If the SME exemption is narrowed, medium-sized businesses may need to apply transfer pricing rules to their cross-border transactions, necessitating additional documentation and analysis;

• New reporting obligations: The ICTS would require detailed reporting of cross-border transactions, adding to the administrative burden for affected businesses.

Next Steps

The consultation is open until 7 July 2025. Businesses which are likely to be affected are encouraged to review the proposals and consider their potential impact.

For more information or assistance in understanding how these changes may affect your business, please contact our office. partners@rjp.co.uk

How to get onboard with RJP

Talk to us

Have an initial discussion with a member of the RJP team to identify ways we can enhance your business's growth with our comprehensive support and strategic advice.

Hassle-free migration

Choose RJP and we'll smoothly manage all transitions, handling paperwork, coordinating with your current accountant, and ensuring no deadlines are missed for a worry-free experience.

A pathway to growth

Finally, we will send you the required documents to sign and return, leaving you to continue leading your business, backed by our abundant, responsive advice and support.

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