INTM489120 - Unassessed Transfer Pricing Profits Conditions: Identifying Unassessed Transfer Pricing Profits
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)

TIOPA10/S217B

HMRC may assess a company under UTPP where that company has unassessed transfer pricing profits for an accounting period.

A company has unassessed transfer pricing profits for an accounting period if the four criteria in S217B are all met:
- the company has submitted a self-assessed company tax return for the period under FA98/Sch 18/Para 7
- Provision has been made or imposed as between the company and another person (the other party) by means of a transaction or series of transactions
- the profits of the company for that period are subject to a transfer pricing requirement in relation to that provision
- the transfer pricing requirement was not reflected, or not wholly reflected, in the company’s tax return
Put another way, a company broadly has unassessed transfer pricing profits for an accounting period if its company tax return does not comply with the transfer pricing rules, and this has reduced the company’s profit or created/increased a loss for corporation tax purposes.

Provision in this context has the normal meaning for transfer pricing purposes under Part 4 (INTM412050 (https://www.gov.uk/hmrc-internal-manuals/international-manual/intm412050)).

Transaction and series of transactions in this context has the normal meaning for transfer pricing purposes under S150 (INTM412050 (https://www.gov.uk/hmrc-internal-manuals/international-manual/intm412050)).

The transfer pricing requirement

The purpose of the transfer pricing legislation is to counter potential tax loss generated by non-arm’s length pricing of a provision.

The transfer pricing requirement is the requirement for the company’s profits and losses to be calculated under Part 4 as if the arm’s length provision had been made or imposed instead of the actual provision, if this produces a greater taxable profit or lower tax loss. The profits or losses from that provision are then recalculated accordingly.

Where a company’s self-assessment of the company’s profits does not wholly reflect the transfer pricing requirement, the effect will be that the company’s profit for the period is reduced, that the company’s profit for the period has changed to a loss, or that the company’s loss for the period has increased.

So, the profits or losses of a company will reflect the transfer pricing requirement, if the provision or provisions giving rise to the profits or losses have been correctly adjusted as required by the transfer pricing rules. For more information on the transfer pricing requirements for UK companies, see INTM412000 (https://www.gov.uk/hmrc-internal-manuals/international-manual/intm412000).

here will still be a transfer pricing requirement where the company’s profits or losses would have required adjustment under the transfer pricing rules, if not for an adjustment in line with a different set of tax rules which take precedence.