This is part of a review of international tax rules including transfer pricing rules, which have not been significantly updated since they were introduced in 2004, and the use of permanent establishment.

It is reviewing the anti-avoidance measures for countering arrangements designed to divert profits from the UK with a view to simplifying the current guidance and legislation.

The core issue which the government is considering is whether to remove diverted profits tax’s status as a separate tax and bring it into corporation tax. Since it was introduced in 2015, the tax has raised £8bn for the Exchequer.

‘This would clarify the relationship between diverted profits tax and transfer pricing, and provide access to treaty benefits while maintaining key features of the regime,’ stated the HMRC consultation document.

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