How can your intercompany agreements help reduce transfer pricing risks? New HMRC guidance offers key insights for legal and tax teams.
Corporate lawyer and leading expert in the legal implementation of transfer pricing policies for multinational groups. Author of 'Intercompany Agreements for Transfer Pricing Compliance - A Practical Guide'.
New HMRC Guidance for In-house Professionals and Transfer Pricing Advisers: Best practice approaches to lower risk and avoid common mistakes in transfer pricing. Very interesting new guidance published today by HMRC: https://lnkd.in/eWdK6Y43 The guidance includes extensive discussion of risk factors in transfer pricing policy design and documentation, including the role of intercompany agreements. Specific recommendations for best practice include 'signed intra-group agreements' or equivalent 'documents evidencing written arrangements', provided that they are 'contemporaneous'. Other themes include: * the need for intercompany agreements to be 'commercially rational' and aligned with conduct; * the need to carefully design transactions involving intangibles, so as to integrate the contractual treatment of the relevant legal rights with the capability / capacity of the relevant entities to bear risks and control DEMPE functions; * the need to consider whether 'intra-group contracts or arrangements reflect commercially realistic exit charges, notice periods and termination compensation per industry norms'. #TransferPricing #LegalSubstance #IntercompanyAgreements