IEIM140400 - The ICAP stages

IEIM140400 - The ICAP stages

Stage 1 – Selection

Initial contact is made by the MNE group to the tax administration in which they are headed, to discuss their participation in the programme. If suitable, the MNE group submits its selection documentation package to the lead tax administration. The documentation package is shared with other jurisdictions participating in ICAP via competent authorities. Upon receipt, each jurisdiction will decide whether it wishes to take part in the ICAP risk assessment for that MNE group.

The target timeframe for this stage is four to eight weeks.

Stage 2 – Risk assessment and issue resolution

The MNE group submits its main documentation package and this is reviewed by all the jurisdictions participating in the risk assessment.

Any questions arising out of the document review are provided to the MNE group via the lead tax administration. All ICAP risk assessments will involve at least one call or meeting between the participating tax administrations and the MNE group. These interactions are an opportunity for the MNE group to provide further information on their business as well as allowing the tax administrations to share their view of the level of risk.

In addition to meeting the MNE group, tax administrations will discuss the risk assessment to share views and increase their understanding of the MNE group and how each tax administration views the level of risk.

Where a tax administration is not able to conclude the transactions are low risk, it is possible to move to issue resolution. Issue resolution is a more involved process and gives the opportunity for additional information to be provided that may go beyond a typical risk assessment. The flexibility within the ICAP process means that the issue resolution phase may take a number of forms. It may be possible that adjustments are agreed at this stage. This will be dependent on the individual legislation and practices of a tax administration.

Typically, the UK will enter the issue resolution phase when it considers there is a realistic chance of a low risk outcome.

The target timeframe for this stage is typically less than 20 weeks. This can vary depending on the complexity of covered risks which require issue resolution.

Stage 3 – Outcomes

During this stage the MNE group receives an outcome letter from each covered tax administration, outlining the conclusions of each risk assessment in relation to the covered periods and transactions. Where the outcome is that the MNE group is low risk, the outcome letter will also typically cover a roll forward period of two years.

Each outcome letter may differ slightly depending on the individual tax administration rules and practices. The UK’s outcome letter is issued on the facts as presented by MNE group and stands as long as there are no material changes in the facts and circumstances of the MNE group.

Where a high-risk outcome letter is issued, follow up action may be required, this will depend on the tax administrations practices. Any information provided within ICAP will be leveraged by the tax administration to make follow up action quicker and more efficient.

The target timeframe for this stage is four to eight weeks.