INTM489215 - The Unassessed Transfer Pricing Profits Process: The Preliminary Notice
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/S217F

HMRC will only issue a preliminary notice to a company for an accounting period if it is reasonable to believe the UTPP conditions are met. For more information on the UTPP conditions see INTM489200 (https://www.gov.uk/hmrc-internal-manuals/international-manual/intm489200), and for practical advice on when it may be appropriate to issue a preliminary notice to resolve a transfer pricing risk see INTM489400 (https://www.gov.uk/hmrc-internal-manuals/international-manual/intm489400).

HMRC would usually open an enquiry into the company tax return and engage with the company before a preliminary notice is issued. Guidance on customer engagement prior to issuing a preliminary notice is contained in INTM489325 (https://www.gov.uk/hmrc-internal-manuals/international-manual/intm489325).

If HMRC has decided to use the UTPP rules to assess unassessed transfer pricing profits for an accounting period, then a designated officer must first issue a preliminary notice to the company for that period.

A preliminary notice must be issued to the company within four years of the end of the accounting period to which the unassessed transfer pricing profits relate.

A preliminary notice must:
- be issued by a designated officer
- state the accounting period to which the UTPP applies
- the provision to which the profits relate has an Effective Tax Mismatch Outcome (ETMO) in the accounting period (INTM489130 (https://www.gov.uk/hmrc-internal-manuals/international-manual/intm489130))
- the Tax Design Condition (TDC) is met (INTM489140 (https://www.gov.uk/hmrc-internal-manuals/international-manual/intm489140)), and
- the unassessed transfer pricing profits do not arise wholly from excepted loan relationship arrangements (INTM489150 (https://www.gov.uk/hmrc-internal-manuals/international-manual/intm489250))
- set out the amount of unassessed transfer pricing profits and explain the basis of the corporation tax charge
S217F(2) requires the amount of unassessed transfer pricing profits to be determined to the designated officer’s best judgement. This includes circumstances where the officer otherwise has insufficient information to determine or identify the amount of unassessed transfer pricing profits.

Best judgement is not the equivalent of the best result of the most favourable conclusion. It is a reasonable process by which an assessment is successfully reached. The meaning of the phrase ‘best judgement’ is expanded upon in VAEC1420 (https://www.gov.uk/hmrc-internal-manuals/vat-assessments-and-error-correction/vaec1420).

For more information on the designated officer process, see INTM489250 (https://www.gov.uk/hmrc-internal-manuals/international-manual/intm489250).

The preliminary notice should contain sufficient information to allow the company to fully understand why the designated officer made the decision to issue a preliminary notice.

Once the designated officer has decided to issue a preliminary notice and has signed the notice, then a hard copy should be issued to the company. The issue date is the date the notice leaves HMRC, for example when it is given to Royal Mail, so you should consider how long this will take when dating your notice.

Multiple provisions

Where UTPP applies to more than one provision in respect of the same accounting period, then this can be addressed either through issuing multiple preliminary notices for the accounting period or through a single notice in respect of multiple provisions.

Where a preliminary notice is issued in respect of more than one provision in an accounting period, then each provision should be clearly described with its own explanation of how the conditions set in S217C(1) are met and how the unassessed transfer pricing profits have been calculated and charged.