INTM489245 - The Unassessed Transfer Pricing Profits Process: Postponement
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)

TIOPA/S217K

The only provision for postponement on corporation tax charged at the UTPP rate under Part 4A, is under S217K.

The purpose of S217K is to allow a limited postponement where some tax has already been paid by the other party on the unassessed transfer pricing profits (paid relevant tax, see below). The postponement should be only for tax paid on those profits and only until the UTPP charge is finalised.

S217K is expected to work in the same way as TMA70/S55. For more information see ARTG2500 (https://www.gov.uk/hmrc-internal-manuals/appeals-reviews-and-tribunals-guidance/artg2500).

S217K applies where a designated officer has assessed the unassessed transfer pricing profits of a company for an accounting period under an assessment or an amendment to an assessment, and the amount of paid relevant tax is greater than nil.

The paid relevant tax is the relevant tax charged (in any period) on profits that correspond to the unassessed transfer pricing profits, that has been paid by the other party to the provision and has not been refunded (and would not be refunded if all reasonable steps were taken to secure that it was refunded).

Relevant tax is defined in INTM489130 (https://www.gov.uk/hmrc-internal-manuals/international-manual/intm489130) as including income tax, corporation tax, any amount chargeable as if it were corporation tax or treated as if it were corporation tax, and any foreign tax falling within TIOPA/S259B(2).

In order to request a postponement, the company may apply in writing to HMRC for a determination of the amount of the corporation tax charged on the unassessed transfer pricing profits which is to be postponed until the assessment is finalised. For information on when the assessment is finalised see INTM489270 (https://www.gov.uk/hmrc-internal-manuals/international-manual/intm489270).

The application must be made within 30 days beginning the day after the unassessed transfer pricing profits were assessed, or if later, any day on which the amount of paid relevant tax ceases to be nil. Postponement applications should be considered and decided upon by the designated officer.

If the determination is not agreed, the application can only be referred to the tribunal within 30 days of the date of the document notifying the company of HMRC’s determination.

Once a the UTPP assessment has finalised, then any amount postponed under s217K will no longer be eligible for postponement. However, the company will be able to apply to HMRC for double taxation relief under the normal provisions as per INTM160000 (https://www.gov.uk/hmrc-internal-manuals/international-manual/intm160000).

Example

In the accounting period ended 31 December 2026, a UK entity, Company L, has performed management and strategic services in respect of a retail franchise business. Company M in Country M receives the retail revenues from third-party franchisee customers and pays 25% of the revenues to Company L. HMRC considers that Company L is under-rewarded for the management services it performs, such that there are unassessed transfer pricing profits of £10m for the period.

On 30 June 2028 Company L is assessed for the £10m of unassessed transfer pricing profits at a UTPP rate of 31% such that corporation tax of £3.1m is due.

The other party to the provision Company M has brought into account the £10m of profits which correspond to the unassessed transfer pricing profits. Country M’s normal corporation tax rate is 15%, however Company M has benefitted from tax reliefs which reduced the corporation tax actually paid to 10% or £1m.

Company M has also been subject to a Qualified Domestic Minimum Top-Up Tax (QDMTT) under Pillar Two. Company M has paid an additional 5% tax rate on its own undertaxed Pillar 2 profits.

Company L submits its postponement application under S217K(2) by the deadline of 31 July 2028. The application states that the amount of paid relevant tax is the £1m which has been paid by Company M on the profits that correspond to the unassessed transfer pricing profits. Company M includes a copy of its tax return, a copy of its bank statement showing payment of tax, and correspondence from Country M’s tax authority confirming receipt of payment, as documentary evidence.

Company M does not include the Pillar Two tax paid as an amount of paid relevant tax, because Company M (the other party to the provision) is not directly charged on the profits that correspond to the unassessed transfer pricing profits, and the tax does meet the definition of foreign tax in S217T.

The postponement application is approved by HMRC, and £1m of the £3.1m UTPP charge is postponed so that only £2.1m is immediately due and payable.

At the end of the period for amendments if the UTPP charge is finalised, then the £1m will be due and payable. Company L and/or Company M can pursue double taxation relief in respect of the £1m through the usual double taxation routes.