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HMRC Signals New Approach To Transfer Pricing

by Jason Gorringe,, London

25 June 2007

HM Revenue and Customs has published two consultation documents aimed at enhancing the way the tax department deals with transfer pricing enquiries and rulings and clearances.

The consultation document, entitled: 'HMRC approach to transfer pricing for large business' looks at: ways in which HMRC can better target its transfer pricing enquiries and focus on the right issues; resolving transfer pricing enquiries faster, with an 18 month completion timetable as the norm; and devoting more resources to transfer pricing with more specialist input.

Welcoming the announcements, the Paymaster General, Dawn Primarolo, commented: "Publishing these two consultations today marks an important practical next step in providing business with certainty on specific tax issues, by taking forward the recommendations of Sir David Varney's 2006 Review of Links with Large Business.

"Ensuring the effectiveness and cost-efficiency of the rules in these complex areas of Transfer Pricing and Clearances is an important shared objective for both business and Government. Working together is essential to achieving that joint objective."

The other document, 'Giving Certainty to Business through Rulings and Clearances' considers: giving businesses who seek HMRC's view on significant issues both pre and post transaction, a binding view within 28 days; and providing binding rulings across all relevant taxes for businesses that provide clear plans for investment.

Dave Hartnett, Director General Business Strategy, observed: "We are moving from an ad hoc approach on these issues to a more project managed system - businesses want to have greater certainly earlier and this is what we are offering them. Gone will be the days when a decade can pass before issues are resolved around transfer pricing.

Last November we promised to consult on these issues during the summer and have done so. We want to work closely with business, agents and representative bodies to get these proposals right. Now we need business to play its part and help build a constructive and transparent relationship with HMRC."

The closure date for submissions is September 15, 2007 for the first document and September 3, 2007 for the second document.

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