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Use the Transfer pricing template to make transfer pricing adjustments to the company's taxable profit. Where transactions between connected parties are not on arm's length terms, the transfer pricing rules (Part 4 of the Taxation (International and Other Provisions) Act 2010, TIOPA 2010) require the profit to be computed as if arm's length terms had applied. The template records the adjustment and feeds it into the computation.

Table of contents 

When should I use this template?

Use it where the company has transactions with connected parties that require a transfer pricing adjustment to arrive at an arm's length result. Some businesses — for example, many small and medium-sized enterprises — are exempt from transfer pricing; the template is used where an adjustment is required.

Before you start

A business type must be selected in the Business type section of the Return information template. If none is selected, the template shows a warning and cannot calculate.

How the analysis works

Add a row for each transfer pricing adjustment, describe it, and enter the adjustment required to bring the profit to an arm's length figure. The template totals the adjustments per business type. All inputs roll forward to nil, so each year's adjustment is entered fresh rather than carried forward.

What flows through to the rest of Corporation Tax?

The transfer pricing adjustment feeds the adjustment to profit for the relevant business type, increasing (or, where permitted, decreasing) taxable profit to the arm's length figure.

Where the data comes from

  • The transfer pricing adjustments are entered here (inputs roll forward to nil, so each year's adjustment is entered fresh); the business type comes from Return information.
  • The adjustments flow out to the relevant income computation, and loan-relationship transfer pricing adjustments are also picked up by the Loan relationships template.

Frequently asked questions

Which rules apply?

The UK transfer pricing rules in TIOPA 2010 Part 4, which require profits from connected-party transactions to be computed on an arm's length basis.

Why do the entries not roll forward?

Transfer pricing adjustments are specific to each period's transactions, so inputs roll forward to nil and are entered fresh each year.

Are all companies subject to transfer pricing?

No — there are exemptions (for example, for many SMEs). Use the template where an adjustment is required.