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Transfer Pricing Documentation Requirements You Need To Know About! Here’s How Coventry Accountant Can Help You.

You might need Coventry Accountant by your side because of changes in the generic record-keeping requirements for businesses. If you know about it you know that this helps to check the UK’s transfer pricing documentation requirements. But HMRC found a flaw in the system. 

They found the lack of specific transfer pricing documentation requirements troublesome. That was because it led to uncertainty for UK businesses. Especially when it comes to accurate and enough transfer pricing documentation record keeping.

To resolve the issue HMRC issued a public consultation in March 2021 about the change in documentation requirements.

After much consideration, HMRC issued a policy. The policy states that every large or multinational company must maintain a master file and local file in a standard format.

These companies will also have to create a summary audit trail. This audit trail is a short questionnaire that contains the details of the main actions. Mainly the actions that were undertaken during the preparation of the transfer pricing local file document.

To understand it better you can reach out to the best Accountants in Coventry.

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Which companies and businesses are likely to get affected by this step?

The ones who will get affected by this new scheme are:

  • Large multinational companies that have a taxable presence in the UK
  • Companies that fall under the country-by-country regime and
  • Individuals with ownership.

When will the authorities impose this measure?

The implementation date of this measure is set to 1 April 2023. This means that it will apply to companies whose accounting periods begin on or after April 1, 2023.

Will this measure affect the current procedure of transfer pricing requirements in the UK?

The OECD revealed guidance on a standardized approach for transfer pricing documentation.

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The standardized approach contains:

  • A Master file:

This file will contain information relevant to the multinational enterprise group members.

  • A Local file: a file referring to the material transaction of the local taxpayer.
  • A country-by-country report:

This report will tell about the largest multinational enterprise group. And this file will keep data about the following:

  • The global allocation of income
  • Taxes paid
  • Profit
  • And economic activity of the tax jurisdictions in which it operates.

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