Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

International Manual

From
HM Revenue & Customs
Updated
, see all updates

Transfer pricing operational guidance: Evidence gathering: Using a test year

The test year

In reviewing the transfer pricing adopted by a business, case teams will often need to consider the position over a number of years.

It may not be necessary to repeat the fact-finding process in the same depth for each year. Providing the facts and circumstances are more or less the same then using a test year to establish the facts in detail will be a sensible way forward. Always consider how changes in commercial factors would have affected the arm’s length reward in any given year.

A test year need not necessarily be the year on which the HMRC team originally engaged with the business. On occasion it may be easier to pick another year where there is more information and the facts are easier to ascertain.

This does not imply any departure from the principle that a company should be able to demonstrate that the arm’s length standard was applied when the return was made for each year.