Bloomberg, Bloomberg: UK Yields Record £3.4 Billion from Transfer Pricing Cases:

The UK’s transfer pricing revenue almost doubled to £3.4 billion ($4.6 billion) in 2024-25 from a year earlier, reaching the highest annual level ever, official data showed Wednesday.

Tax revenue raised from settling transfer pricing cases rose from £1.8 billion in 2023-24, as the number of settled inquiries rose to 143 from 128, according to His Majesty’s Revenue and Customs’ annual data. The jump is mainly attributable to a small number of very high-value cases completed last year.

The average age of settled transfer pricing inquiries during the latest period increased to 41 months in 2024-25 from 33.1 months in the previous year.

Transfer pricing refers to the valuation of transactions between related companies for tax purposes.

“This government is committed to making sure that big businesses pay the tax they owe,” Exchequer Secretary to the Treasury Dan Tomlinson said in a statement. “Last year we nearly doubled the tax we secured from transfer pricing challenges, preventing big businesses from shifting their profits overseas.”

Additional revenue generated by the UK tax authority from investigations into diverted profits by multinationals jumped to £1.8 billion in 2024-25 from £117 million in the previous year.

HMRC is currently conducting around 53 reviews into multinationals with arrangements to divert profits, involving £3.5 billion as at the end of March 2025, it said.

The UK tax authority received 42 notifications from multinationals informing it about arrangements that potentially fall within the scope of the diverted profits tax, or DPT, legislation, up from 16 in 2023-24.

The UK introduced DPT in 2015 to curb the use of tax avoidance strategies by multinationals and has gained revenue of over £10.5 billion through March 2025, HMRC said.

Advance Pricing Agreements

HMRC entered into 26 advance pricing agreements, or APAs, with businesses in 2024-25, little changed from 27 the previous year. An APA is an agreement between a business and the UK tax office on the transfer pricing method to apply to complex cross-border transactions to avoid disputes.

The average time to reach APAs, however, declined to 43.9 months from 53 months, even as new APA applications during the year fell to 20 from 45.

HMRC resolved 115 mutual agreement procedure, or MAP, cases compared with 86 the previous year. The average time to resolve MAP cases remained declined to 24.8 months from 28.8 months.

MAPs are out-of-court dispute resolution processes that allows taxpayers and tax authorities to negotiate resolutions to double-taxation issues.