INTM917330 - DRAFT: The International Controlled Transactions Schedule (ICTS): Overview of the ICTS Legal Framework
This guidance is in draft. It covers the International Controlled Transaction Reporting Regulations 2026 (‘the Regulations’), which were laid before the House of Commons on 4 November 2026. HMRC aims to publish the ICTS notice on 26 November 2026 (when the Regulations come into force), and detailed guidance on the ICTS notice in this manual by 31 December 2026, prior to the reporting requirement coming into effect from 1 January 2027.
Introduction
The legislative basis for the reporting requirement spans primary, secondary and tertiary legislation.
At a high level, the primary legislation at section 48 of the Finance Act 2026 gives the Commissioners for HMRC the legal ability to make regulations that would require in scope persons to provide specified information on international controlled transactions to HMRC.
The International Controlled Transaction Reporting Regulations 2026 (‘the Regulations’) are those powers being enacted. They set out who is required to provide the information, when, and how, including the penalties for failure to comply. Notices published by the Commissioners for HMRC specify what is to be provided in detail.
The primary, secondary, and tertiary legislation needs to be considered holistically to give a full understanding of the reporting requirement. Guidance on each tier of legislation is provided in this manual.
Primary Legislation: Section 48 of the Finance Act 2026
The primary legislation gives the Commissioners for HMRC the power to make regulations for the purposes of requiring information to be reported. The power given is specific and defines what the regulations may cover.
S48 outlines that regulations can impose an obligation on a reporting entity (s48(1)(c)) to provide information (s48(1)(a)), and that the time of reporting, the period the reporting relates to, and the form and manner of the information may be specified (s48(1)(b)). The regulations are given the power to address non-compliance and impose penalties (s48(1)(d)) and detail appeals provisions (48(1)(e)).
The primary legislation also gives the regulations the ability to make provision by reference to things specified in a notice (s48(2)(b)) or direction (s48(2)(c)) published by the Commissioners and to make provisions for different purposes (s48(2)(a)) including the exercise of discretion (s48(2)(d)).
The primary legislation introduces the concept of the 'specified international controlled transaction' (SICT) and states that the reporting requirement is limited to information connected to such transactions (s48(1)(a)). The definition of 'specified' is deferred to the regulations, however 'international controlled transaction' is defined to capture all transactions in relation to which either the transfer pricing condition or the permanent establishment condition is met.
The transfer pricing condition directly references the UK transfer pricing legislation at Part 4 of The Taxation (International and Other Provisions) Act 2010 (TIOPA 2010) and aligns to the basic pre-condition which must be satisfied before the basic transfer pricing rule can apply (see s. 147(1) TIOPA 2010). Firstly, the transaction or series of transactions is the means by which a provision has been made of imposed, within the meaning of Part 4 of TIOPA 2010. Secondly, the participation condition must be met, again within the meaning of Part 4 of TIOPA 2010.
However, for the purposes of the Regulations one of the parties to the provision must be a non-UK resident person, or a partnership with a non-UK resident person, and the other must be one of the following:
- A UK resident company
- A non-UK resident company within the charge to corporation tax under paragraphs (a), (c) or (d) of section 5(2) of CTA 2009 (often referred to as non-resident corporate (or company) landlords)
- A partnership whose members include a company within the charge to corporation tax
The permanent establishment condition applies to a transaction relevant to the determination of the profits or losses of a permanent establishment. That permanent establishment can be the foreign permanent establishment of a UK resident where section 18A of CTA 2009 (Exemption for profits or losses of foreign permanent establishments) has effect, or the UK permanent establishment of a non-UK resident company.
For the permanent establishment condition, the term transaction includes transactions that may be treated to have occurred. The Regulations define that this includes transactions attributable to a permanent establishment, and dealings, described under s48(6) as a transaction that may be treated to have occurred for the purposes of applying Chapter 3A or 4 of Part 2 CTA 2009. The information that needs to be reported where the transfer pricing or permanent establishment condition is met is covered in detail in the notice, and guidance to the notice.
Secondary Legislation: The International Controlled Transaction Reporting Regulations 2026
Detailed guidance on the Regulations is at INTM917400 onwards.
These set out the requirement in law, create the obligation to report and introduce key concepts that shape the obligation. The Regulations also detail how provisions will be enforced, including through the application of penalties. They set out:
- Who is obliged to report (the ‘reporting entity’)
- Which transactions are to be reported (the ‘specified international controlled transaction’ (‘SICT’))
- The information to be reported on those transactions (‘specified information’)
- The form and manner of how information is to be provided, including the standard of ‘accuracy’ that applies
- When the report should be submitted / amended
- Exemptions from the reporting requirement
The Regulations also make provision by reference to things specified in a notice published by the Commissioners for HMRC. Such provisions include the threshold a SICT must meet or exceed before it becomes reportable, and the power to create further exceptions to the reporting requirement.
Tertiary Legislation: Notices Published by the Commissioners for HMRC
Detailed guidance on notices published by the Commissioners for HMRC will be provided at INTM917500 onwards.
The purpose of such notices is to provide the granular detail on the requirements set out in, and under the powers provided by, the Regulations.
They provide specific detail on the information required to be reported for different types of transaction, the relevant thresholds for reporting, where transactions may be aggregated into single entries and how that should be done.