Transfer pricing is one of the most significant and complex areas of tax risk affecting multinational groups. It is also one of the main areas of focus for tax authorities and supranational organisations, such as the OECD. The numbers involved are significant and growing. In the UK alone, HMRC has reported that in the years from 2011/12 to 2017/18, it secured £6.5bn of additional tax by challenging the transfer pricing arrangements of multinationals.

The government’s concern about the diversion of UK sourced profits to other tax jurisdictions was given additional emphasis in January with the launch of the profit diversion compliance facility, a disclosure initiative designed to encourage multinationals to voluntarily disclose and resolve historic tax exposures.