INTM489350 - The Unassessed Transfer Pricing Profits Practical Guidance: Post-UTPP Assessment

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

Where HMRC has made a UTPP assessment and later decides that one or more of the conditions in s217C(1) are not met, but nonetheless the company's return did not fully reflect a transfer pricing requirement, the UTPP legislation provides that:

  • the UTPP assessment must be withdrawn, or
  • the UTPP assessment must be amended such that the profits are assessed to corporation tax at the normal rate and not at the UTPP rate

This is explained in INTM489265.

Where a corporation tax enquiry is open then it will be best practice to withdraw the assessment and make any transfer pricing adjustment through the corporation tax enquiry mechanism.

Where there is no corporation tax enquiry but there is a discovery position, then it will be best practice to amend the UTPP assessment such that the unassessed transfer pricing profits are assessed to corporation tax at the normal rate.

If an assessment is made under UTPP then any unassessed transfer pricing profits still in charge (at the UTPP rate or the normal corporation tax rate) at the end of the period for amendments must only be included in the UTPP assessment and not duplicated in a corporation tax closure notice or in a discovery assessment.

Treaties

The UTPP rules form part of the UK corporation tax regime and are therefore regarded as a covered tax under UK double taxation agreements.  

Consequently, UTPP adjustments will fall within the scope of those agreements. This means that treaty benefits, including access to the Mutual Agreement Procedures (MAP), will be available in relation to UTPP adjustments in the same way as any other transfer pricing adjustment where the conditions for requesting MAP under the relevant tax agreement are satisfied.

Companies subject to the UTPP rules can submit a MAP request in the usual way. Further information on the MAP process, including how to submit a request, can be found at INTM423040.