INTM489275 - The Unassessed Transfer Pricing Profits Process: Appeals and Reviews
Source: gov.uk (2025-12-04)


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 (https://www.gov.uk/hmrc-internal-manuals/international-manual/intm489500)

Appeals

TIOPA10/S217M

A company may only appeal against a UTPP assessment when:
- it has paid the amount of the assessment not postponed under s217K, and
- the period for amendments has ended
Notice of appeal must be given within 30 days starting from the end of the period for amendments. Notice should be in writing and specify grounds of appeal.

Tribunal

TIOPA10/S217M

When determining an appeal, the tribunal has power to confirm, amend or cancel an assessment.

The UTPP legislation confirms that if a tribunal decides that one or more conditions in s217C(1) are not met, but nonetheless the company's return did not fully reflect a transfer pricing requirement, it is open to the tribunal to amend the assessment such that the profits are assessed to corporation tax at the normal rate and not at the UTPP rate.

Review of Assessment

TIOPA10/S217N

Where a company appeals a UTPP assessment, then HMRC are required to conduct a review of the assessment under TMA70/S49B and S49C.

The UTPP legislation confirms that if upon a review of the assessment HMRC decides that one or more conditions in s217C(1) are not met, but nonetheless the company's return did not fully reflect a transfer pricing requirement, then HMRC may amend the assessment such that the profits are assessed to corporation tax at the underlying corporation tax rate and not at the UTPP rate.

Settling of Appeal

TIOPA10/S217P

If the company appeals a UTPP assessment, then HMRC and the company may settle the appeal by agreement.

The UTPP legislation confirms that where HMRC and the company decides that one or more conditions in s217C(1) are not met, but nonetheless the company's return did not fully reflect a transfer pricing requirement, HMRC and the company may agree to settle the matter by amending the assessment such that the profits are assessed to corporation tax at the underlying corporation tax rate and not at the UTPP rate.

Losses

As explained in INTM489230 (https://www.gov.uk/hmrc-internal-manuals/international-manual/intm489230), in some circumstances, the failure to reflect a transfer pricing requirement in the company’s tax return will create or increase a loss in that accounting period. Where a UTPP assessment has been made, because the tax return is not amended any losses brought into account in the company tax return are also not amended.

S217S describes these losses, which are reflected in the company’s self-assessment but which the transfer pricing requirement requires to not be brought into account, as excess losses.

Where an assessment is amended under the UTPP rules such that the profits are assessed to corporation tax at the normal rate and not at the UTPP rate, then any excess losses cannot be used to relieve the unassessed transfer pricing profits.

The outcome of this is that the corporation tax at the normal rate due on the unassessed transfer pricing profits remains due and payable.

Genuine losses can still be relieved against the unassessed transfer pricing profits charged at the normal corporation tax rate in the usual way.

Example

Company N submits its self-assessment for an accounting period and this returns a loss of £500,000. HMRC considers that the company has £1m of unassessed transfer pricing profits in the accounting period such that had the transfer pricing requirement been fully reflected in the self-assessment, then the company would have returned a profit of £500,000.

HMRC makes a UTPP assessment which charges the £1m of unassessed transfer pricing profits at the UTPP rate. Company N is unable to use the £500,000 filed loss to relieve those profits and reduce the UTPP charge. However, the loss can still be carried back, surrendered to sideways relief or carried forward and used against later accounting periods in the usual way.

During the period for amendments, Company N decides to revise its transfer pricing position. Company N amends its tax return under S217I to bring into account £750,000 of additional profits. This eliminates the £500,000 loss and leaves the company with a £250,000 profit which is chargeable to corporation tax at the normal rate. The company tax return for the next year is amended under FA98/Sch 18/Para76 to recover any tax relief from the £500,000 loss which was carried forward.

HMRC reviews its assessment under S217J. It amends the assessment to recognise that there is now only £250,000 of unassessed transfer pricing profits left which are chargeable at the UTPP rate.