The International Controlled Transactions Schedule (ICTS)

Question 1

Summary

Accepted Answer

Subject of this consultation

This technical consultation invites views on the details of a draft International Controlled Transactions Schedule (ICTS) reporting requirement.

Scope of this consultation

At Budget 2025, the government announced its decision to implement the ICTS. Finance Act 2026 gave the Commissioners of HM Revenue and Customs (HMRC) the power to introduce regulations requiring in-scope multinationals to file an ICTS. The government intends that the ICTS reporting requirement will take effect for accounting periods beginning on or after 1 January 2027.

The ICTS will facilitate automated, data-led risk assessment by HMRC, permitting more accurate identification of transfer pricing risk. It will increase efficiency by promoting tax compliance at the earliest opportunity and reducing the length of transfer pricing enquiries. Taxpayers will benefit from shorter, better targeted enquiries from HMRC that are focused on cases where adjustments to transfer pricing are required.

This measure is intended to:

improve fairness: ensuring multinational enterprises pay tax on profits generated from economic activity in the UK
increase efficiency: meaning that HMRC compliance activity can be more effectively targeted, benefiting compliant taxpayers

In this consultation, the government is seeking views on draft regulations and a draft HMRC notice, which detail the ICTS reporting requirement. A draft template illustrating the information that would need to be reported to HMRC (as described in the draft HMRC notice) is shown in the Draft ICTS Template 2026 attachment.

It should be noted that the use of Excel to depict the ICTS template is entirely illustrative, for convenience, and not indicative of IT design. HMRC will work collaboratively with software providers, other intermediaries and end users on the IT design of the ICTS. We will look to ensure the final design minimises burdens and reflects user needs, consistent with HMRC’s strategic approach to third-party software.

The government welcomes suggestions from stakeholders on how its aims can be achieved whilst limiting additional administrative burden on businesses.

Who should read this

This consultation document should be read by:

businesses currently within scope of the UK transfer pricing or permanent establishment legislation
advisory firms, representative bodies, and legal firms acting for those businesses

Duration

The consultation will run from 16 June 2026 to 31 July 2026.

Lead official

The lead officials are Jennifer Buchanan, Steve Edge and Kim Taylor of HM Revenue and Customs (HMRC).

How to respond or enquire about this consultation

Please email responses to tp_scope_and_documentation@hmrc.gov.uk.

Additional ways to be involved

Officials will hold meetings with interested stakeholders who wish to discuss the proposals.

The consultation concerns specialist subject matter and officials will approach stakeholders that are likely to have an interest through established channels.

After the consultation

The government will analyse the responses to the consultation. The views expressed will feed into the drafting of the statutory instrument which the government expects to lay in late 2026. Consultation responses will also inform the notice which HMRC intends to publish by the end of 2026.

Getting to this stage

Under The Transfer Pricing Records Regulations 2023, the government introduced a requirement for the largest businesses to maintain specific transfer pricing documentation and provide it on request. Those documents need to be prepared in accordance with the Organisation for Economic Cooperation and Development (OECD) Transfer Pricing Guidelines 2022 (TPG).

The government consulted on proposals to introduce an ICTS requirement in spring 2025. Detailed, constructive feedback was received from stakeholders on the design and scope of the reporting requirement. A summary of responses was published in November 2025, which confirmed the government’s decision to implement the ICTS.

Section 48 of Finance Act 2026 gives HMRC’s Commissioners the power to introduce regulations requiring in-scope multinationals to file an ICTS. The government is now consulting on draft regulations and a draft notice, which will determine the detailed design of the ICTS.

Previous engagement

The previous government consulted on a similar proposal to the ICTS in 2021: Transfer pricing documentation. Responses received at that time have been taken into account in the preparation of the current proposal.

Question 2

1. Introduction

Accepted Answer

Transfer pricing is a means of pricing transactions between connected parties, based on the internationally recognised arm’s length principle. The arm’s length principle seeks to determine what the price would have been if the transactions had been carried out under comparable conditions by independent parties.

The UK transfer pricing legislation is contained within Part 4 of the Taxation (International and Other Provisions) Act 2010 (TIOPA). The international consensus on applying the arm’s length principle is set out in the TPG. UK transfer pricing legislation is interpreted in accordance with the TPG.

Corporation Tax (CT) is charged on the worldwide profits of UK resident companies, and the profits of non-UK resident companies insofar as they relate to business activities carried on in the UK through a permanent establishment. This is an internationally recognised standard that is reflected in the UK’s double taxation treaties.

The information provided on an ICTS will be highly valuable to HMRC in facilitating automated, data-led risk assessment and more accurate identification of international tax risk. It is expected to increase efficiency by promoting upstream tax compliance and reducing the length of transfer pricing and permanent establishment enquiries. Taxpayers are expected to benefit from shorter, better targeted enquiries from HMRC. In response to feedback received in the 2025 consultation, changes have been made to the draft ICTS template to further limit the administrative burden on businesses. The government has focused on ensuring the requirement is proportionate and focused on information that is necessary to facilitate risk identification. Materiality thresholds and targeted exemptions remain in place as further mitigations.

This consultation seeks views on draft ICTS regulations, a draft HMRC notice and draft template depicting key aspects of the proposed ICTS policy design.

Question 3

2. International Controlled Transactions Schedule

Accepted Answer

Background

In the UK, all businesses are required to keep records to make and deliver a complete and correct return. UK entities with provisions in scope of transfer pricing need to demonstrate that related party transactions have been identified and priced in accordance with Part 4 TIOPA.

The UK implemented Country-by-Country Reporting (CbCR) in 2016. The OECD designed country-by-country reports to provide tax authorities with an overview of multinational’s global profits and taxes by jurisdiction. Information is aggregated at this jurisdictional level and used to inform high-level transfer pricing risk assessment. The CbCR requirement applies to multinationals with consolidated group revenue of at least €750 million that have 2 or more enterprises tax resident in different jurisdictions.

To further align with OECD agreed standards, the UK introduced the Transfer Pricing Records Regulations in 2023. These regulations require UK entities that are members of groups meeting the CbCR thresholds to maintain transfer pricing master and local files. Specifically, the requirement is to maintain and provide those documents to HMRC upon request, but not to file them. The master file contains standardised information that is relevant to all group members. The local file refers specifically to the material transactions of the local taxpayer. Both are detailed, narrative documents that are not subject to prescribed formats.

However, CbCR, master and local file documentation are neither designed, nor suitable for detailed automated risking at scale, utilising objective financial data. CbCR provides group-wide financial information, suitable for higher-level risk assessment only. The master and local file are intended to provide compliance teams upon request, with a relatively detailed narrative analysis of a taxpayer’s transfer pricing positions.

The ICTS aims to meet a need which is not met by existing transfer pricing documentation requirements. It complements these, rather than duplicating them. Specifically, the information included in the ICTS will be used for automated, data led risk assessment and manual risk identification. It will enable HMRC to reduce the number of enquiries opened on businesses with limited transfer pricing risk and better target higher risk arrangements.

At the same time, HMRC intends to design the ICTS in a manner that makes the maximum possible use of work carried out to fulfil existing requirements, whilst still meeting the objectives of introducing the ICTS. Where businesses are required to prepare a local file, they should largely be able to use their existing transfer pricing analysis when completing the ICTS.

The government is open to proposals on how to limit the administrative burden on businesses who already have specific transfer pricing documentation requirements. Simplifications could include allowing businesses to exclude data provided in the ICTS from the local file. Businesses are invited to comment on whether this would offer a valuable simplification in consultation responses.

Draft regulations

This consultation invites views on the draft International Controlled Transaction Reporting Regulations 2026, which cover the following parts:

Part 1: introductory
Part 2: reporting requirements in relation to specified international controlled transactions
Part 3: penalties, appeals and enforcement

Part 1: introductory

Part 1 sets out how the draft regulations should be cited and interpreted. It states that they apply for accounting periods beginning on or after 1 January 2027. It also specifies the aspects of the reporting requirement that may be determined by an HMRC notice or Commissioners’ direction.

Comments on the draft HMRC notice are invited in a subsequent section of this consultation. There is no specific intention to issue a Commissioners’ direction at this time. A draft Commissioners’ direction has therefore not been shared for comment.

Question 1: The government welcomes views on Part 1 of the draft International Controlled Transaction Reporting Regulations 2026.

Part 2: reporting requirements in relation to specified international controlled transactions

Part 2 specifies which entities have a reporting obligation, and the international controlled transactions that need to be reported. It also describes the information to be reported, with further detail provided in the draft HMRC notice. Finally, it prescribes the form and manner for providing information and allows for ICTS filings to be amended within specified time limits.

International controlled transactions are defined by section 48 of Finance Act 2026 as meeting the transfer pricing condition or the permanent establishment condition. Part 2 of the regulations determines which international controlled transactions are Specified International Controlled Transactions (SICTs). Information connected with SICTs needs to be reported on the ICTS, subject to thresholds set out in the draft HMRC notice.

There will be no requirement for transactions that are exempt from transfer pricing to be reported on the ICTS, unless the permanent establishment condition is met. This will cover scenarios where the small and medium-sized enterprise exemption applies.

Transactions covered by an in-force Advance Pricing Agreement (APA) that agrees pricing with HMRC are also exempt from the reporting requirement. Where the answer for Part 4 TIOPA has been agreed, it would be redundant for the information to be provided as no transfer pricing risk is present.

Currently, transactions that have been confirmed as low risk under the International Compliance Assurance Programme (ICAP) are not exempt. Where transactions are deemed low risk under ICAP, it is not anticipated that compliance resources will be dedicated to further review for a two-year period. However, ICAP does not provide legal certainty on pricing. The government is considering whether an exemption from reporting would be appropriate within the 2-year period where a low-risk rating has been given under ICAP. Views on this point are welcomed.

It should also be noted that the financial information provided in the ICTS should be prepared on the same basis as the financial information submitted in the relevant tax return. For example, the same accounting standard should be applied. Further guidance on this will be provided in advance of implementation.

Question 2: The government welcomes views on Part 2 of the draft International Controlled Transaction Reporting Regulations 2026.

Part 3: penalties, appeals and enforcement

Part 3 sets out a draft penalty regime for the ICTS. It is largely consistent with similar regimes, such as the penalty regimes for Country-by-Country Reporting and the Transfer Pricing Records Regulations 2023. It states how penalties will be assessed, paid (including the proposed amounts payable), enforced, and the procedure for appeals.

Question 3: The government welcomes views on Part 3 of the draft International Controlled Transaction Reporting Regulations 2026.

Question 4: The government welcomes any other comments on the draft International Controlled Transaction Reporting Regulations 2026, including any aspects not covered by the regulations at this time.

HMRC expects to provide a soft-landing for penalties for the first period of filings through its interpretation of what constitutes a reasonable excuse. Account will be taken of businesses needing time to adjust to the new filing requirement. Further guidance on the soft-landing period will be provided in advance of implementation.

Draft HMRC notice

Thresholds

The draft regulations set out that international controlled transactions need to be reported where the threshold requirement is met. Proposed threshold amounts are listed in the draft HMRC notice. Higher thresholds apply to reporting entities that are members of an enterprise that is subject to Country-by-Country Reporting.

The feedback to the 2025 consultation reflected that the use of thresholds was a welcome simplification, and the proposed values were broadly felt to be reasonable. The majority of those thresholds have therefore been retained in the draft HMRC notice. New threshold proposals also accompany certain format changes. Any further views on the proposed approach to thresholds, or the values applied, are welcome.

Question 5: The government welcomes views on the draft threshold amounts specified in the draft HMRC notice.

Specified information

The draft HMRC notice states the specified information that needs to be reported in the ICTS filing in a narrative form. For ease of reference, that information is also represented as a draft template shown in the Draft ICTS Template 2026 attachment, ‘the 2026 ICTS’. This can be compared with the previous draft template shared at Annex B of the 2025 consultation, ‘the 2025 ICTS’. As noted above, the use of Excel to depict the ICTS template is entirely illustrative, for convenience, and not indicative of IT design.

The main changes to specified information in the 2026 ICTS compared to the 2025 ICTS are summarised and explained in the ‘draft ICTS template’ section below. Comments are invited on whether the draft notice clearly conveys the detailed requirements of an ICTS filing, when considered alongside the draft regulations and template.

Question 6: The government welcomes views on whether the draft HMRC notice clearly conveys the detailed requirements of an ICTS filing.

Question 7: The government welcomes any other views on the draft HMRC notice.

Draft ICTS template

In response to the feedback received in the 2025 consultation, careful thought has been given to further minimising the administrative burden associated with the ICTS. Significant changes have been made to ensure that the requirement is proportionate and suitably targeted to identify transfer pricing and permanent establishment risk. General simplifications which apply to all businesses are described at Section A and Section B below.

Targeted rules have also been proposed which apply to certain businesses in the Financial Services (FS) sector. Those are described in Section A(i) and Section B(i). The vast majority of businesses outside of the FS sector will have nothing to disclose in those sections and need not consider those aspects further. Those sections take a distinct approach given the unique nature of the regulation and transaction types found in certain businesses in the FS sector.

Question 8: The government welcomes overall views on whether the 2026 ICTS offers a reduced administrative burden and a more targeted approach than the 2025 ICTS.

Section A

Section A of the 2025 ICTS dealt primarily with non-financial transactions and dealings. It set out a list of transaction types, and requested details of the counterparty, Transfer Pricing Method (TPM), pricing, and income or expense impact. Transactions could be aggregated for disclosure where they were of the same type, with the same counterparty, and the same TPM was applied on a consistent basis.

A number of respondents to the 2025 consultation suggested that greater flexibility over the approach to aggregation would make data collection easier. It was noted that the 2025 ICTS design could result in the disclosure of a very high volume of lines of transactional data in some circumstances. Respondents suggested that aligning aggregation in the ICTS more closely with the local file would reduce compliance burden. Some also noted that the current design might need adjustment for the profit split methodology.

Taking this feedback onboard, Section A of the 2026 ICTS allows for aggregation that is more aligned with the local file. Aggregation has been re-orientated around the transfer pricing policies that a business has applied. SICTs that are priced using the same comparability analysis would be disclosed in a single line.

This means aggregation is permitted where the TPM, relevant percentage metrics, and underlying comparables (where relevant) are consistent. Examples of relevant percentage metrics include the profit margin or percentage mark-up on costs. Transactions where comparability adjustments have been made would be disclosed separately.

Under Section A of the 2026 ICTS, businesses would be required to disclose details of:

the transfer pricing methodology the comparability analysis has identified (column B)
whether the reporting entity was treated as the tested party where a one-sided method has been applied (column C). Several respondents to the 2025 consultation recommended adding this question
objective factual information regarding the application of the TPM for the period, such as the profit level indicator and a margin or mark-up. Where there are multiple counterparties and different mark-ups or margins are achieved in practice, a blended margin should be disclosed (columns D and H for one-sided methods, and columns E to H for profit splits)
a list of the categories of transactions or dealings priced under the same comparability analysis, with the ability to select multiple options where relevant (column I)
a list of the counterparties to the transactions that have been priced under the same comparability analysis (column J)
the overall profit and loss (P&L) impact of all transactions priced under the same comparability analysis (columns K to L)
for transactions with multiple counterparties where the value per counterparty exceeds the relevant threshold, the net amount and relevant percentage metric(s) for the 10 most (P&L) impactful counterparty relationships (column M)
any additional voluntary information relating to the transaction disclosed in a dedicated white space (column N)

Where a valuation methodology has been used to price transactions involving the transfer of intangibles, information is requested on the relevant valuation metrics. The proposed disclosure requirements are set out at Section A — Valuation.

This increased aggregation is intended to lessen administrative burden in a way that is consistent with how transfer pricing policies have been set and applied. Where multiple transaction types and counterparties apply, we anticipate that the IT design will allow these to be tagged and listed.

Take the example of a UK entity providing IT services to 50 group companies where all transactions are priced using the same comparability analysis. Under the 2025 ICTS, 50 rows of data would have been reported. Under the 2026 ICTS there would be only one entry, with limited further disclosure of the top 10 net income/expense amounts and relevant percentage metrics by counterparty.

Importantly, this approach to aggregation also offers flexibility for disclosure where the transactional profit split method has been applied. A business can now amalgamate relevant details of a profit split where that split is based on a single comparability analysis. Where a difference in the comparability analysis leads to different profit splitting factors being applied, a separate line of disclosure would be required.

Where no comparability analysis has been undertaken, disclosure cannot be aggregated. Transactions should be reported on individual lines, and ‘not applied’ should be selected in the transfer pricing column B. For Section A, columns C to H will be omitted as there will be no information on the transfer pricing analysis to disclose. Column M will be omitted as no aggregation is allowed. Further explanation of why no transfer pricing analysis has been undertaken can be provided at column N.

Question 9: The government welcomes views on the draft Section A of the 2026 ICTS.

Section B

Section B of the 2025 ICTS dealt primarily with the pricing of financial transactions and dealings. Aggregation was permitted only where counterparty identity and currency were the same, and material disclosure was required. Greater detail was requested for the top 5 transactions or dealings by value of in-year P&L impact.

Consultation feedback indicated that this approach did not allow sufficient aggregation, particularly as only transactions in the same currency could be aggregated. It was also highlighted that the disclosure required for derivatives, which formed part of Section A in the 2025 ICTS, was unclear.

In response to this feedback, the 2026 ICTS only requires detailed disclosure of the top 5 debits connected with loan relationships and top 5 creditor relationships. This is expected to significantly reduce the administrative burden of disclosure, particularly for reporting entities with high volumes of transactions relating to loan relationships.

Where the reporting entity is a borrower, the top 5 debits relate to loan relationships with the largest P&L impact, for example, the greatest interest expense. Where the reporting entity is a lender, detailed disclosure pertains to the top 5 creditor relationships with the largest balance sheet value. This can be taken as the average across the period of the opening and closing balances disclosed in columns G and H. This approach reflects better targeting of transfer pricing risk where interest paid is more than arm’s length, and interest received is less than arm’s length.

For the top 5 loan relationship debits and creditor relationships the disclosure has been refined to prioritise information that is most useful for transfer pricing risk identification. This is mostly objective information that can be provided by numerical entries or selecting dropdown options. Section B is intended to reflect the work done by the business to price loan relationships.

Where types of analysis are not deemed to be relevant or otherwise haven’t been undertaken, this can be reflected by selecting the ‘not established’ option. For example, if no credit rating has been used in a comparability analysis, then ‘not established’ can be selected at column P.

The top 5 debits and creditor relationships remain subject to the proposed financial thresholds set out in the draft HMRC notice. Section B in the 2026 ICTS effectively caps disclosure of loan relationships at 12 lines of information.

For derivative contracts, details of the top 5 SICTs should be disclosed by greatest in-year P&L impact (quantum of income or expense). There then follows an aggregated total disclosure of remaining SICTs, limiting disclosure requirements for derivative contracts to 6 lines of information. The proposed disclosure requirements are set out at Section B — Derivatives.

Question 10: The government welcomes views on the draft Section B of the 2026 ICTS.

Section A(i)

The government understands that there are specific scenarios in the FS sector where there can be very high volumes of intra-group transactions. These include global trading in financial instruments which supports the outward facing, and often regulated, activity of FS businesses.

In these scenarios, numerous transactions priced using different comparability analyses may sit underneath each individual trade. Completing Section A of the 2026 ICTS for this activity may present a disproportionate administrative burden, with minimal additional benefit to HMRC for risk identification.

To address this, Section A(i) could be completed as an alternative to Section A in targeted cases where both of the following conditions are met:

a business has SICTs within activity group(s) in the ‘trading and sales’ business line outlined in the Basel II framework
multiple comparability analyses have been used to price SICTs associated with a particular activity group

Aggregation under Section A(i) would result in a single line of disclosure for each applicable activity group in the ‘trading and sales’ business line, as follows:

the estimated total operating profit/(loss) attributable to the reporting entity during the accounting period (column B)
an estimate of the total group operating profit/(loss) for the accounting period (column C)
transfer pricing methodologies (select all that apply) (column D)
the activities that the reporting entity undertakes that are associated with the estimated operating profit/(loss) in column B (select all that apply) (column E)
counterparty identities and jurisdictions (select all that apply) (column F)
any additional information disclosed in a dedicated white space (column G

Where the outturn of SICTs are disclosed under Section A or A(i), those SICTs are exempt from disclosure under Section B. Take an example where a reporting entity is party to a back-to-back derivative trade in support of outward facing, regulated trading in financial instruments. Where the outturn for that back-to-back transaction is disclosed under Section A(i), the transaction would not be separately disclosed in Section B. The exception to this rule would be additional tier 1 and tier 2 capital issuances, which must be disclosed under Section B(i) as described below.

Representations would need to be made for the expansion of Section A(i) to cover any other business lines in the Basel II framework. Consultation responses recommending wider application would need to set out why it is necessary, appropriate, and justified to apply this simplification to any other business lines.

Question 11: The government welcomes views on the draft Section A(i) of the 2026 ICTS.

Section B(i)

In some cases, regulatory capital can be the source of material transfer pricing risk in certain FS businesses. To address this, the government proposes introducing a requirement for separate disclosure of each intra-group issuance or holding of certain regulatory capital under Section B(i). The information required for disclosure broadly reflects the general requirements under Section B, with some tailoring to distinguish tier 1 and tier 2 capital.

As outlined above, additional tier 1 and tier 2 capital issuances must be disclosed under Section B(i). Disclosure under Section B(i) is required where applicable regardless of entries under Section A or A(i). Issuances or holdings disclosed in Section B(i) would not be included in the top 5 debits and credits or the totals disclosed under Section B.

Question 12: The government welcomes views on the draft Section B(i) of the 2026 ICTS.

List data

The list data sets out the choices currently envisaged where ICTS information will be disclosed through selecting one or more options from a drop-down list. The 2026 ICTS sets out which categories are expected to use list data.

Question 13: The government welcomes views on the draft list data for the 2026 ICTS.

Other information

Finally, the 2026 ICTS asks for the disclosure of some basic identifying information for the reporting entity. It also asks for responses to supplementary questions in a manner consistent with the 2025 ICTS.

All amounts need to be disclosed in Great British Pounds (GBP). If the reporting entity’s functional currency is not GBP, that should be disclosed in column D of the Identifying Information section, with the exchange rates used for reporting in column E.

Question 14: The government welcomes views on any other information requested in the 2026 ICTS.

Question 4

4. Assessment of impacts

Accepted Answer

Summary of impacts

Year	2025 to 2026	2026 to 2027	2027 to 2028	2028 to 2029	2029 to 2030	2030 to 2031
Exchequer impact (£m)	+0	+25	+105	+150	+245	+350

These figures are set out in Table 4.1 of Budget 2025 and have been certified by the Office for Budget Responsibility. More details can be found in the policy costings document published alongside Budget 2025.

Exchequer Impact Assessment

Impacts	Comment
Macroeconomic impact	This measure is not expected to have any significant macroeconomic impacts.
Impact on individuals, households and families	There is no impact on individuals as this measure only affects businesses.
Equalities impacts	This measure only affects businesses, therefore it is not anticipated that there will be disproportionate impacts on those in groups sharing protected characteristics
Impact on businesses and Civil Society Organisations	This measure will have a significant impact in aggregate across the population of approx. 75,000 businesses who are in the scope of UK transfer pricing, permanent establishment, and foreign permanent establishment legislation as they will be required to file an ICTS with HMRC. One-off costs could include familiarisation with the changes and implementation of suitable systems and processes for data collection. Continuing costs will include the resource required to gather the relevant data in each period. The proposal is expected to be broadly aligned with similar overseas requirements and is intended thereby to mitigate additional administrative burdens by requiring the reporting of readily available information. These costs have been estimated on an aggregate basis across all in-scope groups. This measure is not expected to disproportionately impact civil society organisations.
Impact on HMRC or other public sector delivery organisations	Changes to HMRC IT systems will be required, with estimated costs of £6 million over the scorecard period. Operational resource impacts are still being assessed.
Other impacts	Other impacts have been considered and none have been identified.

Further information on impacts can be found in the ICTS Tax Information and Impact Note.

Question 5

5. Summary of consultation questions

Accepted Answer