What is changing?
HMRC intends to introduce a filing requirement for businesses within UK transfer pricing rules that have transactions with connected parties overseas. This may include UK groups with overseas companies or branches and UK subsidiaries or branches of overseas groups.
This requirement is to report additional information to HMRC in a return called the International Controlled Transactions Schedule (ICTS). Assuming the proposed timetable is not delayed, an ICTS would need to be filed by in scope taxpayers for each relevant accounting period beginning on or after 1 January 2027.
The ICTS would provide HMRC with taxpayer specific information about their cross-border transactions with connected parties such as goods, services, loans, interest and royalties. It would also cover dealings between a UK branch and the overseas parts of the same business.
Transfer Pricing Rules
In broad terms, where they apply, transfer pricing rules require taxable profits to reflect the price that independent parties would have agreed in comparable circumstances.
HMRC wants to materially increase the information it receives in relation to taxpayers and transfer pricing so it can quickly and efficiently risk assess individual taxpayers’ compliance with the UK’s transfer pricing rules.
Current status
Finance Act 2026 gives HMRC power to introduce the requirement through regulations. A consultation on draft regulations, a draft HMRC notice and an illustrative reporting template closed on 31 July 2026. The final regulations, notice and filing format have not yet been published. The final rules will determine the scope, required information and filing process.
Preparing for the change
The ICTS will sit alongside existing transfer pricing records rather than replace them. A group may have several reportable transaction categories, each supported by different agreements, records and pricing analyses. Information filed with HMRC should be consistent with the accounts, tax computations and the way connected party arrangements operate in practice.
Detailed work to comply with the new filing requirement may be premature until HMRC publishes the final rules, which are expected later in 2026. During the Autumn, businesses have time to consider existing transfer pricing documentation and controls and whether additional work may be needed.
An initial review could identify the UK companies and branches concerned, their cross-border connected-party transaction categories and the teams responsible for information and pricing. For a UK member of an overseas group, this may require input from the overseas parent as well as the UK finance team.
Once the final rules are available, groups can assess whether the required information is accessible and whether existing transfer pricing records reflect current activities. Ideally this would allow any gaps to be addressed before the first affected accounting period begins. Since at present the first accounting period starts in a little over four months, and it may be a few months until the final rules are available, this does not give businesses much time.
If you would like to discuss how the proposed changes could affect your business, please contact Andrew Fitton, Corporate and International Tax Partner, or your usual UNW tax contact.
