Audit

TP Back to Basics – HMRC’s Process for Examining Transfer Pricing Reports

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This article is accompanied by a slide presentation on YouTube. Feel free to use my material for your in-house purposes, all I ask is that you acknowledge the source. Read the rest of this entry »

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How would your TP Documentation stand up to HMRC Audit?

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Netherland vs. A BV, October 2017, Lower Court, case no 2017: 5965

In this recent transfer pricing case the Dutch Courts reduced the tax authority’s adjusted assessment of €188.3m down to €32.1m

The basic facts are:

  • A Dutch parent company had provided services to foreign subsidiaries on a cost-plus basis.
  • The parent received compensation when a business restructuring transferred its HQ and strategic functions to Switzerland.
  • The Dutch Tax Authorities concluded that this compensation was not enough and that the parent continued to perform strategic functions for the group.

However, the Court ruled that:

  • the parent had fulfilled its legal obligations by preparing thorough transfer pricing documentation.
  • that the burden of proof was on the Dutch tax authorities and
  • the tax authorities did not provide sufficient arguments to support their adjustment.

This outcome illustrates the importance of ‘preparing thorough transfer pricing documentation’ and, although it’s a Dutch example, the principle holds good across jurisdictions.

If you are interested in finding out how your TP documentation might fare if audited by HMRC then read on…… Read the rest of this entry »

“KPMG rocked by South African corruption scandal”

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Source: accountancyage.com, 27 September 2017

“KPMG’s South African branch has come under fire and suffered a severe reputational hit after becoming caught up in a growing corruption scandal surrounding one of the country’s most powerful families, the Guptas.”

“KPMG is accused of facilitating the family in tax evasion and corruption. The firm denies any wrongdoing but admits to missing several “red flags” in relation to the family’s accounts. At least eight senior KPMG South Africa officials have resigned in the wake of the scandal, including CEO Trevor Hoole.”

“KPMG conceded that audits of Gupta companies: “fell well short of the quality expected, and that the audit teams failed to apply sufficient professional scepticism and to comply fully with auditing standards”.”

“As a result of the scandal KPMG have lost several audit contracts in South Africa, with even more companies considering severing ties. The firm is under investigation by South African regulatory body IRBA and risks being removed from the country’s auditors’ register.”

Source article here

 

Court Rules In Favor Of Taxpayer In Canadian Transfer Pricing Audit Case

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Source: offshorenewsflash.com 23 August 2017

“The Federal Court of Canada has ruled that the Canadian Revenue Agency may not conduct further in-person interviews with representatives from a multinational corporation concerning its transfer pricing affairs, having already discussed earlier tax years.

Ruling in favor of Cameco Corporation, the Federal Court, in Minister of National Revenue v Cameco Corporation (2017 FC 763), noted that the Minister’s power “is not so wide to compel an indeterminate number of people for oral interviews.””

Source article here

 

“Tax officials crafting plan to jointly identify large multinationals with low risk of tax avoidance”

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Source: mnetax.com 7th June 2107

“Eight countries are working on a new program to jointly review large multinationals’ tax affairs and, if appropriate, provide assurances to the multinational that it will not likely be audited in those jurisdictions with respect to specific tax risks, officials said June 6 in Washington at a conference sponsored by the OECD, USCIB, and BIAC.

The program, which will be piloted by Italy, US, UK, Spain, Austria, Germany, Netherlands, and Canada, could eventually be offered by all 47 countries participating in the Forum on Tax Administration, namely, all OECD and G20 countries plus a few others.”

Source article here