Transfer Pricing End-of-Year Adjustments in the United Kingdom

Abstract

The United Kingdom’s transfer pricing legislation, contained in Part 4 of the Taxation (International and Other Provisions) Act 2010, mandates that profits and losses for tax purposes be calculated as if arm’s length provisions were made between related parties, aligning with OECD guidance. This legislation generally only allows adjustments that increase UK profits (a feature often referred to as the “one-way street”), with exceptions only for mutual agreement procedure outcomes or compensating adjustments between UK resident entities, resulting in careful consideration of intercompany arrangements being required to minimize year-end adjustments.This article is part of a special issue of the International Transfer Pricing Journal on transfer pricing end-of-year adjustments. The other articles include the General Report and contributions on Belgium, France, Germany, Ireland, Italy, Korea,the Netherlands, Spain and the United States.