Transfer pricing

Transfer pricing is a key issue for investment managers, banks and brokers with intragroup cross border operations, and for larger entities with intragroup UK operations. Related party transactions must be charged on an arm’s length basis in order to file a complete and correct tax return. HM Revenue & Customs (HMRC) requires related party transactions to be identified and the basis for the arm’s length charges must be evidenced. This would typically be substantiated in a report when initially considering the arm’s length basis and after a study of comparable charges in the industry.

Kinetic Partners can assist you with structuring your operations in a tax efficient way. We can advise on the possible application of transfer pricing legislation, prepare transfer pricing documentation and assist with queries from HMRC. This includes:

• Advising on tax efficient structures for new set ups and reviewing current structures for established groups, to ensure appropriate arm’s length charges are made for tax purposes.
• Reviewing income flows and service levels provided by respective entities.
• Providing comparable financial data from a range of similar businesses to the entity.
• Recommending reasonable income flows to the UK, based on comparable data and specific factors applicable to the entity.
• Providing a transfer pricing report, documenting findings and recommendations.
• Reviewing current structure to determine transfer pricing implications.

We aim to ensure that enquiries from HMRC are less likely to occur, due to viable transfer pricing policies. Transfer pricing reports which evidence the background for policies, will address most initial queries in the case of an enquiry. In particular our extensive industry knowledge ensures tailored and in depth advice on transfer pricing policies and an understanding of appropriate comparables.

For further information please contact Stephen Rabel or your usual contact in the Tax team.