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HMRC internal manual

International Manual

Transfer pricing: operational guidance: working a transfer pricing case: assessments and enquiry closure notices


When a transfer pricing enquiry is closed or any tax assessment is made that reflects a computational entry for transfer pricing, care must be taken to comply with the provisions of TIOPA10/S208(3) and (4) (FA98/S110(6) for company accounting periods ending before 1 April 2010).

If those provisions are not complied with, the transfer pricing element of the closure notice or assessment will be invalid.

Closing an enquiry - by agreement

A transfer pricing adjustment which is agreed between HMRC and the business does not need Commissioners’ sanction (see below), but the agreement must be made in the form specified by TIOPA10/S208, that is:

  • the terms of the agreement are made or confirmed in writing with the business, and
  • 30 days pass in which the business may withdraw from the agreement.

This procedure must be followed in all cases.

After the 30-day ‘cooling-off period’, if the business has not withdrawn from the agreement, then the closure notice or assessment may be issued without a Commissioners’ sanction.

There is currently no standard form for the agreement or confirmation.

Commissioners’ sanction

A Commissioners’ sanction is a determination under TIOPA10/S208 (FA98/S110 for accounting periods ending before 1 April 2010) that a transfer pricing adjustment is to be made which has not been agreed by the business.

The issue of the following notices or assessments containing a transfer pricing adjustment under TIOPA10/Part 4 must be sanctioned by the Commissioners for HM Revenue & Customs:

  • a closure notice - see FA98/SCH18/PARA32 or TMA70/S28A or TMA70/S28B
  • a notice amending a partnership return - see TMA70/S30B(1)
  • a discovery assessment - see FA98/SCH18/PARA41, TMA70/S29 and FA08/SCH39

unless the transfer pricing adjustment has been agreed with the business - TIOPA10/S209(1).

A copy of the Commissioners’ sanction must be sent to the business before or at the same time as the issue of the assessment, otherwise the determination will be invalidated - see TIOPA10/S208(2) and (4). The business must also be provided with an explanation of why the adjustment is being made and how it has been calculated.

Requests for Commissioners’ sanction should be made to CTIAA Business International to which authority has been delegated.

Information to include in request for a Commissioners’ sanction

The request for approval should also ensure that the following points are covered:

  • the identities of the parties to the transactions
  • confirmation that the control requirements of TIOPA10/Part 4 apply
  • evidence that there is an actual or potential loss of UK tax paid by the business
  • an indication of the amount of tax actually, or potentially, at stake

No statement should be made to a business that approval will automatically be forthcoming, since each case will be considered on its merits. However, cases that have been properly worked in accordance with this guidance will normally obtain approval.

Any challenge made to the validity of any adjustment included in a closure notice or discovery assessment on the grounds that the approval or agreement under TIOPA10/S209 (FA98/S110) is invalid should be referred to Business International for advice.