Transfer pricing: operational guidance: governance: the stages of an enquiry
The governance process
When the transfer pricing group (TPG) was set up, each enquiry or potential enquiry to which the transfer pricing governance applied was subject to a process involving five stage gates consisting of the business case, enquiry decision, action plan, six monthly review and resolution review. This process acknowledged that each enquiry should proceed through distinct stages and allowed HMRC to effectively manage and bring consistency to its work on transfer pricing issues. With the benefit of experience it was felt that the procedures could be streamlined into three stages. The revisions do not relax the rigour of the process; rather the revisions seek greater integration of the governance process with existing case management systems within HMRC.
The three stages of TP Governance are:
- Making sure the selection of a case is appropriate,
- Ensuring there is effective progress in a case, and
- Reaching the appropriate conclusion in a case
All three aspects are essential to the process. All remain mandatory. Therefore, the selection stage will continue to require that a business case is made, and approved, before an enquiry is commenced. The second, progress, stage brings together the action plan requirement and the progress review requirement into one ongoing review process which is linked, where appropriate, through a new template to existing casework control mechanisms in place within HMRC. The resolution phase is unchanged from the old stage gate five in requiring approval for any settlement proposals.
The main change brought about by the review of governance, apart from a redesigned control form, is therefore in the progress stage. Each directorate will decide the best method for checking effective progress within their business area. This will allow each directorate to tailor the progression stage to its own systems. The progression reports, in the system adopted, should continue to be submitted to the TP Panels as previously.