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The UK government has opened a consultation on a number of proposed changes to the transfer pricing, permanent establishment and diverted profits tax legislation.
The stated purpose of the reform is to clarify and modernise the legislation, and ensure it achieves its objectives, while developing simpler rules that are easier to understand and which support growth by improving tax certainty. Beyond simplification, the key theme running through the consultation is to achieve further alignment between UK domestic legislation and OECD international principles. HMRC has confirmed that the entirety of the package of reforms is intended to be revenue neutral.
The deadline for responses is 14 August. HMRC will also run four stakeholder events, covering different topics, at the end of June/ beginning of July. HMRC anticipate draft legislation may be announced at the next Autumn Statement or Spring Budget and has already indicated that there may not be sufficient time for a full consultation on it. This is far from ideal given that the proposed reforms affect several key areas of UK tax legislation.
There is much to digest in this latest HMRC consultation, which impacts on fundamental UK aspects of international tax planning for multinational groups. Our insights in this alert benefit from having attended the first of HMRC’s consultation meetings at which we were able to learn more.
Click here to access the full alert.
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