INTM489230 - The Unassessed Transfer Pricing Profits Process: Interaction with Corporation Tax Framework

UTPP will apply to accounting periods beginning on or after 1 January 2026.  This guidance will be updated with detailed examples by 1 January 2026.  For earlier accounting periods please use the diverted profits tax guidance at INTM489500

UTPP is charged via a standalone assessment process, so the company’s tax return is not amended when a UTPP assessment is made.

As a result the legislation is able to give the company an additional opportunity to amend its tax return so that it more fully reflects the transfer pricing requirement. This means that some, or all of the unassessed transfer pricing profits are included in the company tax return and charged to corporation tax at the underlying rate. Any amendment should be made to the best of the company or agent’s information and belief. Where a company amends its tax return, HMRC will review the assessment and reduce or withdraw it accordingly. For more information, see INTM489260.

Losses

In some circumstances, the failure to reflect the transfer pricing in the company’s tax return will have created or increased a loss in that accounting period.

Where a UTPP assessment has been made, then because the tax return is not amended any losses brought into account in the tax return remain eligible for loss relief in the usual way.

The way that unassessed transfer pricing profits are charged to tax at the UTPP rate in S217(4) prevents any losses from being used to relieve unassessed transfer pricing profits, see INTM489125.

TIOPA10/S217L

Where a designated officer:

  • assesses a company’s unassessed transfer pricing profits for an accounting period, and
  • there is an open enquiry into the company tax return for that period

A partial or final closure notice cannot be issued in relation to that enquiry during the period for amendments. It's therefore important that clear notes are made on COTAX and CRMM/ Caseflow when a UTPP assessment is issued, highlighting that a closure notice cannot be issued during this period.

This means that if a company applies to the tribunal for a direction for HMRC to issue a closure notice, any direction has no effect until the period for amendments has ended.

The period for amendments may be ended early by mutual agreement as set out in INTM489255.

If a closure notice is issued in relation to the enquiry after the end of the period for amendments, that notice may not include any unassessed transfer pricing profits which remain chargeable in the UTPP assessment. This ensures that the company does not suffer from double taxation.