INTM489340 - The Unassessed Transfer Pricing Profits Practical Guidance: Running Investigations
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)

HMRC governance

When the detailed risk assessment concludes that a preliminary notice should be considered, this recommendation will be subject to governance.

The usual compliance governance processes for international enquiries will apply to UTPP cases and there is also a specific HMRC governance process for UTPP.

The governance process for UTPP is designed to provide safeguards and reassurance for customers. Key UTPP decisions can only be made by a designated officer. This includes:
- issuing a preliminary notice, and
- making, amending or withdrawing a UTPP assessment
The case team should make detailed submissions to provide the designated officer with the relevant information relating to the case and explain the case team’s analysis and recommendation. Submissions should be made using a prescribed template.

The designated officer is advised by the Diverted Profits Advisory Group (DAG). They will review the case team’s submission and make a recommendation to the designated officer. For more information on the designated officer’s role, see INTM489250 (https://www.gov.uk/hmrc-internal-manuals/international-manual/intm489250).

Fact Finding

Many contrived arrangements to circumvent the UK’s transfer pricing rules use legal structures to shift profits away from where economic value is being added. HMRC wishes to work collaboratively with companies to understand the arrangements, and what is being done on the ground in the UK and overseas with reference to evidence.

The approach to any UTPP investigation is determined in light of the level of risks and the nature of the issues being investigated and therefore should be determined on a case-by-case basis.

When running a UTPP investigation, HMRC may consider the following actions where appropriate:
- Requesting and reviewing relevant transfer pricing documentation and intercompany agreements and seeking clarification from the company on any areas that appear unclear;
- Holding a meeting with the company at the outset – involving the LB International Tax Specialists or MSB Profit Diversion Technical Coordinators, appropriate senior managers and members of the tax team from HMRC and the company – to outline the potential tax risks, agree a high level timetable for investigation, and the resources that would be required from both HMRC and the company;
- Encouraging cooperation and agreeing with the business a joint action plan for carrying out work - regularly discussing progress against the plan, the reasons for any potential slippage and keeping it updated;
- Establishing the facts before getting into detailed technical discussions. Ensuring that the key facts gathered as the investigation progresses are recorded and discussed with the company. Any narrative provided by HMRC that summarises key facts is not intended to be agreed by the customer as a ‘Statement of Facts’ – it is HMRC’s summary of the key facts. It should not include assertions, argument or conclusions drawn from the facts;
- Not considering just the UK economic activities in isolation but understanding them in the context of the global value chain – HMRC needs to understand the worldwide picture and the totality of the arrangements that are in place to reach a view on whether a UTPP charge arises;
- Formulating informal information requests in a format which can be converted easily into a formal request and having a dialogue with the company about the relevant information and evidence and how it can best be provided. Following that discussion HMRC expects the company to respond thoroughly and timeously;
- Using information powers promptly, where necessary, to obtain the evidence HMRC considers relevant. Following up failures to comply with formal information notices and considering the application of relevant penalties;
- Promptly reviewing information and documents provided by the company and then discussing the next steps with the company;
- Gathering further information by interviewing key staff, making third party approaches and having sight of emails and/or other communications;
- Holding regular face-to-face meetings to ensure that the company and HMRC understand each other’s technical analysis and arguments, the key facts on which they are based, and the key differences of view. Agreeing an agenda and where possible circulating papers in advance. HMRC and the company should both ensure that the right people attend the meeting to discuss the agenda items;
- Considering recommending issuing a preliminary UTPP notice, where the conditions have been satisfied. HMRC should explain its views and plans to the company in this regard and where possible give them the opportunity to respond before recommending the issue of a preliminary notice through UTPP governance. A preliminary notice should not be a surprise to the company.