Controversy

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 »

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“‘Google tax’ nets HMRC £281m”

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Source: accountancy age.com 14 September 2017

“Diverted profits tax revenue collected by HMRC in 2016-17 totalled £281m, leaping from £31m collected in the previous year, according to data released by HMRC.”

“However, law firm Pinsent Masons said that many DPT disputes become transfer pricing disputes, and HMRC is spending an increasing amount of time settling the cases.”

““Transfer pricing disputes are taking HMRC nearly two-and-a-half years to settle – a year longer than its internal target. This is creating a serious backlog,” said Heather Self, partner at the firm.”

“Self said that she expected the number of DPT charging notices issued by HMRC to increase next year, as the tax applies to profits arising from 1 April 2015, and the deadline for notices for the period ending 31 December 2015 is 31 December 2017.”

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