HMRC published the briefing earlier this month, setting out its approach to the transfer pricing arrangements of multinational companies operating within the UK.
One taxpayer said he appreciated the publication of the briefing, but a tax adviser said it is unlikely that the target audience will get the message.
“It explains some of the background in a clear and objective way. I think it is very useful for HMRC to share its views in this way and to inform the wider debate. HMRC, the OECD and business generally support the existing transfer pricing law and practice although everyone would agree that work should continue on updating and refining the rules,” said Paul Morton, head of tax for Reed Elsevier.
“Only I am not sure who is going to read this briefing, unless they put copies of it in the entrance of metro stations, and with a very good picture of a holiday destination (which should not be a sunny island with palm trees),” added Agata Uceda of DLA Piper.
The PAC debate has yielded criticism from people working in the tax industry, with advisers and taxpayers alike saying the debate lacks an all-encompassing view of international taxation and that the committee is playing to the UK electorate.
In response, HMRC has published the briefing to clarify the role it plays in moderating a company’s transfer pricing, in conjunction with other concerned international tax authorities: “HMRC challenges arrangements that do not allocate enough profit to the UK in accordance with the rules. This work has resulted in the collection of billions of pounds of tax that would otherwise have been lost.”
But the announcement holds little information for taxpayers, beyond what they already know.
“HMRC, like many other organisations, occasionally does a little advertising of their achievements and future direction,” said Stephen Labrum of Alvarez & Marsal – Taxand. “The comments made by the PAC in recent months have not been flattering with respect to HMRC’s enforcement against transfer pricing arrangements seen by the PAC as aggressive. Given the publicity achieved by the PAC, it seems very reasonable to see HMRC making public announcements heralding what they have achieved through their enforcement efforts and the progress they expect to make in the future.”
In addition, one adviser felt the tax authority may be jumping the gun with its reference to the OECD’s Base Erosion and Profit Shifting (BEPS) project.
“I found the reference to “current” transfer pricing rules in paragraph two of final column a little worrying – maybe anticipating where BEPs may go,” said Shaun Austin of Deloitte.
© 2019 Euromoney Institutional Investor PLC. For help please see our FAQ.