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HMRC internal manual

International Manual

From:
HM Revenue & Customs
Published:
9 April 2016
Updated:
5 November 2026 - See all updates

INTM917430 - DRAFT: The International Controlled Transaction Reporting Regulations: Regulations Part 4

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

Part 4 covers regulations 14 to 18, which outline fundamental concepts and terminology within the International Controlled Transaction Reporting Regulations 2026 (the Regulations). These include the transactions in connection with which information must be reported (regulation 14), and transactions which do not need to be reported due to a specific exception from the definition of a SICT (regulation 15).

The Regulations also detail who is required to provide that information to HMRC (regulations 16 and 17), and the information they are required to report (regulation 18).

Regulation 14: Specification of international controlled transaction, reporting entity, and information and exceptions

SICTs are transactions that meet the transfer pricing condition (FA26/S48(4)) and / or the permanent establishment condition (FA26/S48(5)). Specified information on SICTs will need to be reported to HMRC unless:

  • the transaction is specifically exempt in the Regulations (further detail below at regulation 15),
  • is an exempt case in the notice, or
  • is below a threshold specified in the notice (see regulation 4).

Where the permanent establishment condition is met, regulation 14 specifies that only information in connection with the following types of transaction must be reported:

  1. Dealings between permanent establishments and their head offices (regulation 14(b)(i)).
  2. Related party transactions that are SICTs and that are wholly or partly attributable to a permanent establishment. In-scope attributions can be from a UK resident company to a foreign permanent establishment, for the purpose of exemption adjustments made, and from a non-UK resident company to a UK permanent establishment (regulation 14(b)(ii)).

Regulation 15: Exception to regulation 14

Regulation 15 prevents some transactions from being defined as SICTs, by virtue of being exceptions to the rule of regulation 14 which defines a SICT.  As the transactions subject to an exception are not SICTs, they do not need to be reported to HMRC under the Regulations. Where an exception applies to a transaction, it is only for that accounting period; it is not ongoing, and that status must be reviewed each year a transaction is in scope of being a SICT under regulation 14.

If the criterion for the exception applies to the transaction for only part of the accounting period, the transaction must be reported in full as if no exception had applied.

These exceptions are:

  1. Transactions used in calculating the profits and losses of dormant companies, as defined by TIOPA10/165 (regulation 15(2)(a)).
  2. Transactions of small and medium sized enterprises (SME, as defined in TIOPA10/166) where TIOPA/S147(3) and (5) do not apply in calculating the profits and losses of those enterprises for the chargeable period- i.e., where the SME exemption applies (regulation 15(2)(a)). 
  3. Distributions as defined in CTA10/1000 (regulation 15(2)(b)).
  4. Transactions which are relevant to determining the profits (or losses) of a Lloyd’s syndicate, as included in the syndicate return, where the syndicate has two or more members and at least one member is not connected with another member (regulation 15(2)(c)).
  5. Transactions covered by an advance pricing agreement which has effect in accordance with Part 5 TIOPA10 (regulation 15(3)) and where the question to be determined in accordance with the advance pricing agreement specifies the transfer pricing method to be applied to the international controlled transaction. This exception is also extended to transactions covered by an application for an advance pricing agreement, under the terms of Part 5 TIOPA10, that has been accepted in writing as admissible by HMRC (regulation 15(4)). The exceptions at regulation 15(3) and 15(4) do not cover cost contribution arrangement advance pricing agreements (see INTM422160), which only provide certainty regarding the validity of a UK entity’s participation in a cost contribution arrangement.
  6. Transactions where a letter has been issued by HMRC assessing that transaction as low risk in accordance with the International Compliance Assurance Programme (ICAP) Handbook.

For 5 and 6 above, the exception only applies for the duration the advance pricing agreement or low-risk status has effect. For transactions covered by application for an advance pricing agreement, the exemption applies where the application remains accepted as admissible.

Regulation 16: specification of a reporting entity where a transaction meets the transfer pricing condition (FA26/S48(4))

The obligation to comply with the reporting requirements both in the regulations and the notice, is given to a 'reporting entity'. Regulations 16 and 17 detail who the reporting entity is, noting that the reporting entity can vary, contingent on the parties to the transaction, and whether the transaction is a SICT by virtue of the transfer pricing condition or the permanent establishment condition.

A UK resident company will in most cases be the reporting entity for transactions that meet the transfer pricing condition (regulation 16(1)(a)). This includes managing agents of Lloyd’s syndicates, where that managing agent is reporting a transaction that is not relevant to determining the syndicate profit or loss included in the syndicate return.

A managing agent will also be a reporting entity where a Lloyd’s syndicate contains a corporate member, and the transaction is relevant to determining the syndicate profits included in the syndicate return for the underwriting year (regulation 16(1)(c)).

Non-UK resident companies with UK property income are reporting entities (regulation 16(1)(b)). The requirement to report only extends to transactions that are in scope of UK corporation tax for that property income. The ICTS primary legislation (FA26/S4(c)(ii)) and regulation 16(2) identify those transactions by reference to CTA09/S5(2)(a),(c) or (d) (deals in or develops UK land, carries on a UK property business or has other UK property income).

The reporting entity will be the representative partner for a partnership whose partners include a company within the charge to corporation tax (regulation 16(1)(d)).

Regulation 17: Specification of a reporting entity where a transaction meets the permanent establishment condition (FA26/S48(5))

Where the permanent establishment condition is met in relation to a transaction, it is the company of which the permanent establishment is a part that is the reporting entity, regardless of whether the company is a UK resident or not.

Where a UK resident company has attributed profits (or losses) to a foreign permanent establishment and excluded these profits (or losses) from its corporation tax computation under CTA09/18A, the UK resident company is the reporting entity (regulation 17(a)).

Where the transaction is relevant to the determination of profits attributable to the UK permanent establishment of a non-UK resident company, the non-UK resident company is the reporting entity (regulation 17(b)).

In the case of a partnership with a transaction meeting the permanent establishment condition, where one of the partners is a company with a permanent establishment as a result of being a partner in the partnership, the representative partner is the reporting entity. This applies whether the permanent establishment is a foreign permanent establishment of a UK resident company, or the UK permanent establishment of a non-UK resident company. (regulation 17(c)) 

Regulation 18: Specification of description of information to be provided

Details on the information to be provided in connection with each SICT are set out in the ICTS notice, under a power given by regulation 18(2), and this is termed ‘specified information’ (regulation 18(1)).  Categories or required information include the identifying details of entities, SICTs, financing arrangements, and profit attribution and transfer pricing analysis which may be required.