INTM450020 - Transfer pricing records: who is in scope?

UK entities that are members of an MNE group that meets the CbCR threshold (‘the MNE group test’) and have material controlled transactions (see INTM450104) are in scope of the transfer pricing records legislation. The relevant persons (see INTM450030) in respect of UK entities are then required to keep and preserve the specified transfer pricing records. This may not be the UK entity itself.

A UK entity, for the purposes of the MNE group test, includes any of the following:

  • a UK resident company or a company required to file a company tax return in the UK
  • a partnership in relation to which a partnership return is required to be filed in the UK
  • a trust in relation to which a return is required to be filed in the UK (see TSEM1003)

The UK entity is the enterprise that is carrying on a business and is therefore an “associated enterprise” per the definition at Article 9 of the OECD Model Tax Convention (see INTM412030).

An MNE group meets the CbCR threshold when it passes the following tests:

  • it includes 2 or more enterprises that are resident for tax purposes in different jurisdictions
  • it has consolidated group revenues of at least €750 million, either as shown in its consolidated financial statements, or as would have been shown if it had been required to produce them, for the period

The second test relates to the MNE group’s revenue, whether or not that group is headed in the UK.

It is important to note that a relevant person is required to keep and preserve the specified transfer pricing records for any period where the CbCR threshold is met. Where the UK entity has the same accounting period as the ultimate parent entity (UPE) of the MNE group, this differs from the CbC reporting requirements as MNE groups are required to file a CbC report when the CbCR threshold is met for the previous period (see IEIM300030).

It is therefore possible for a relevant person to be required to keep and preserve the specified transfer pricing records even in a period where the MNE group of which the UK entity is a part is not subject to CbC reporting requirements.

Non-coterminous periods

There may be instances where a UK entity does not have the same accounting period (AP) as the UPE of the MNE group, meaning there is a mismatch between the AP of the UK entity and the AP covered by the CbCR.

The requirement to keep the specified transfer pricing records is determined by reference to the UK entity’s AP. If, at the end of the UK entity’s AP, the MNE group met the CbCR threshold in the UPE’s preceding AP then the relevant person is required to prepare the specified transfer pricing records.

For example:

UPE AP ending 31 December 2025 – the MNE group does not meet the CbCR threshold test.

UPE AP ending 31 December 2026 – the MNE group meets the CbCR threshold test.

UK Entity AP ending 30 June 2026 – the UK entity is not in scope because the UPE’s latest AP (31 December 2025) did not meet the CbCR threshold test.

UK Entity AP ending 30 June 2027 – the UK entity is in scope because the UPE’s latest AP (31 December 2026) met the CbCR threshold test.

Where an MNE group is preparing a Master File for the first time, this report is expected to be available to the UK entity by the filing date of the accounting period of the UK entity – in the above example, this would be the filing date for AP ending 30 June 2027.