The UK’s transfer pricing regime is entering a new era.
HMRC has released further consultation proposals on the International Controlled Transactions Schedule (ICTS), a new reporting requirement that will require many businesses to submit detailed annual information on their cross-border related-party transactions.
For businesses that fall within scope, this represents a significant shift. Transfer pricing has traditionally been a matter of maintaining documentation and providing it to HMRC when requested. Under ICTS, HMRC will receive transaction-level data annually, giving it greater visibility over international arrangements and more opportunities to identify areas for enquiry.
While the rules are still being finalised, the direction of travel is clear: greater transparency, more detailed reporting and increased scrutiny of transfer pricing positions.
The introduction of ICTS is just one part of HMRC’s enhanced focus on transfer pricing. If you’re looking for a higher-level overview of the wider transfer pricing issues businesses should be focusing on, read our previous article: Transfer Pricing: 3 Magic Numbers For UK Businesses
What is the International Controlled Transactions Schedule (ICTS)?
The International Controlled Transactions Schedule (ICTS) is a new transfer pricing reporting requirement proposed by HMRC that will require businesses to provide annual disclosures of international related-party transactions.
The regime goes beyond traditional transfer pricing documentation requirements by introducing proactive reporting obligations and a standardised framework for capturing data on cross-border transactions.
At first glance, the proposed disclosures are extensive and, in several areas, more detailed than similar transfer pricing reporting requirements seen in other jurisdictions.
Who Will Be Affected?
Broadly speaking, any business with international related-party transactions should consider whether it could fall within scope.
The proposed rules will apply to:
- UK-resident companies
- Non-UK companies with UK permanent establishments that are within the charge to UK Corporation Tax
- Certain UK partnerships with corporate members
For many groups, this means that transfer pricing reporting obligations may extend beyond the businesses traditionally associated with complex multinational compliance requirements.
When Will ICTS Apply?
The new rules are expected to apply for accounting periods beginning on or after 1 January 2027.
First reporting deadlines
The first filing deadlines are currently proposed as:
- For accounting periods beginning after 1 January 2027 and ending before 30 September 2027 – reporting due by 30 September 2028
- For all other periods – reporting due alongside the company’s normal Corporation Tax filing deadline
For example, a company with a 31 December 2027 year-end would generally need to submit its ICTS by 31 December 2028.
Amendments will generally be permitted until:
- 30 September 2029 for relevant September 2027 year-ends; or
- The statutory Corporation Tax amendment deadline, where later.
Although implementation may feel some way off, businesses should not underestimate the amount of preparation required to collect, validate and report this information.
When Will an ICTS Filing Be Required?
Under the latest proposals, a company must submit an ICTS if either of the following applies:
#1 Transactions with non-qualifying jurisdictions
An ICTS will be required if the company has any transactions with a connected party in a non-qualifying jurisdiction.
Generally, these are jurisdictions that do not have a qualifying tax treaty with the UK (Note that this includes some unexpected territories including Jersey, Guernsey and the Isle of Man)
#2 Transaction value threshold
Alternatively, reporting will also be required where the total gross value of relevant transactions with connected parties in any qualifying territory is £1 million or more.
Importantly, transaction values must be assessed on a gross basis, meaning amounts cannot simply be netted together to reduce reporting obligations.
#3 Materiality Thresholds for Enhanced Reporting
Not all transactions will require the same level of disclosure.
The amount of information that must be reported on the ICTS will depend on transaction type and size.
#4 For multinational enterprise groups within Country-by-Country Reporting (CbCR)
(Groups with global revenue exceeding €750 million)
Additional detailed reporting will generally be triggered where:
- Goods, services, intellectual property or interest expense transactions exceed £1 million
- Loan relationship creditor balances exceed £50 million
#5 For all other businesses
Additional detailed reporting will generally be triggered where:
- Goods, services, intellectual property or interest expense transactions exceed £100,000
- Loan relationship creditor balances exceed £5 million
These thresholds are likely to bring a significant number of transactions within the scope of enhanced disclosure requirements.
Can Transactions Be Aggregated?
The draft regulations allow certain transactions to be aggregated where specific conditions are met.
For example, transactions that apply the same transfer pricing methodology may potentially be grouped together for reporting purposes.
However, the aggregation rules are highly specific and businesses will need to ensure they are applied correctly. Incorrect aggregation could lead to incomplete or inaccurate reporting.
What Information Will Need to Be Reported?
While the final requirements may evolve, HMRC’s draft template indicates that businesses will need to submit information at both an entity level and a transaction level.
Entity-Level Information
Businesses may be required to disclose:
- Company identifiers, including UTR and legal name
- SIC code information
- Functional currency details
- Foreign exchange assumptions
- Ultimate parent company information
- Details of transfer pricing policy changes during the period
- Transfer pricing adjustments included within tax returns
- Information relating to restructurings or intangible asset transfers
Detailed Transaction Reporting
Where materiality thresholds are met, businesses may also need to provide information on:
- Transaction type and category
- Counterparty details
- Jurisdictions involved
- Financial impact on profit and loss
- Transfer pricing methodologies applied
- Pricing metrics
- Economic analyses supporting the transfer pricing position
- Profit level indicators used within transfer pricing models
For many businesses, gathering and validating this information may require significant enhancements to current data collection processes.
Enhanced Reporting for Certain Transaction Types
Some transactions will require additional disclosures due to their complexity and risk profile.
#1 Intercompany Financing Arrangements
For loans and financing transactions, businesses may need to report:
- Interest rates
- Loan terms
- Tenor and repayment profiles
- Security arrangements
- Borrower credit ratings
- Key financial metrics used in pricing assessments, such as gearing and interest cover ratios
#2 Intangible Assets and Business Transfers
Additional reporting may include:
- Valuation methodologies used
- Discount rates
- Growth assumptions
- Inflation assumptions
- Nature of the asset
- Lifecycle of the asset being transferred
#3 Derivative Contracts
Businesses may also need to disclose:
- Contract types
- Notional amounts
- Pricing relative to market conditions
- Impact on profit and loss
Groups with significant intellectual property, complex financing arrangements or large transaction volumes are likely to face the greatest reporting burden.
What Are the Key Challenges for Businesses?
The introduction of ICTS is likely to create several practical challenges.
These include:
- Identifying and addressing data gaps
- Capturing transaction-level profitability information
- Extracting information from multiple finance systems
- Applying aggregation rules correctly
- Maintaining consistency between transfer pricing documentation and reported data
- Managing increased HMRC scrutiny
In many cases, the biggest challenge will not be the transfer pricing analysis itself, but ensuring the underlying data is complete, accurate and accessible.
What Should Businesses Be Doing Now?
The consultation remains open until 31 July 2026, and further changes may still be introduced as the legislation is finalised.
However, given the scale of the proposed requirements, waiting until 2027 is unlikely to be the best approach.
Businesses should consider taking action now by:
#1 Undertaking an Impact Assessment
Identify potentially in-scope transactions and assess whether ICTS is likely to apply.
#2 Reviewing Transfer Pricing Documentation
Review existing policies and documentation to ensure they remain fit for purpose.
Where changes are needed, it may be preferable to make them before reporting begins rather than disclosing significant policy changes in future submissions.
#3 Understanding the Reporting Requirements
Review HMRC’s draft ICTS template and identify the information likely to be required.
#4 Assessing Data Availability
Determine whether current systems can capture the necessary data accurately and consistently.
#5 Developing Governance Processes
Establish clear ownership and responsibilities across tax, finance and operational teams.
#6 Beginning Implementation Planning
Businesses that start planning now will be better positioned to manage the reporting burden and avoid last-minute compliance challenges.
What This Means for Your Business
The proposed International Controlled Transactions Schedule (ICTS) represents one of the most significant changes to UK transfer pricing reporting requirements in recent years.
By introducing transaction-level reporting, HMRC is increasing visibility over cross-border related-party arrangements and creating a more data-driven approach to risk assessment.
For businesses, the challenge is no longer simply maintaining transfer pricing documentation. It is ensuring that the data, systems, governance and reporting processes exist to support a far more detailed level of disclosure.
Those that start preparing early are likely to be in the strongest position when the new requirements take effect.
ICTS may be the headline reporting change, but it sits alongside wider developments in UK transfer pricing, including changes to documentation requirements, increased HMRC scrutiny and greater expectations around governance. We’ve explored these broader developments in our article: Transfer Pricing: 3 Magic Numbers For UK Businesses
How Cooper Parry Can Help
Preparing for ICTS isn’t just about compliance. It’s about ensuring your transfer pricing framework can withstand greater scrutiny while minimising disruption to your business.
Our Transfer Pricing specialists can help with:
- ICTS impact and readiness assessments
- Data and systems gap analysis
- Transfer pricing documentation reviews
- Design of reporting frameworks and governance processes
- Alignment of ICTS reporting with wider transfer pricing compliance obligations
- Ongoing support as the rules develop
Want to understand what ICTS could mean for your business?
Get in touch with our Transfer Pricing team for a practical, no-obligation discussion about your readiness for the new reporting requirements.
Get in touch here: Contact Us | Cooper Parry
