Businesses with related-party international dealings may face:
- a client risk review
- a subsequent audit, with possible pricing adjustments and penalties.
We generally allocate resources to transfer pricing cases based on the perceived risk to revenue of businesses not complying with the arm's length principle.
The broader and more significant the scope of a business's international dealings with related parties, the more likely we are to do a client risk review.
Your business is at the greatest risk of a client risk review if it:
- has significant levels of international dealings with related parties
- pays less tax compared to industry standards
- has recently undertaken business restructures that materially affect its related-party international dealings.
For more information about procedures for taxpayers who enter into an advance pricing arrangement (APA), see the Practice Statement Law Administration PS LA 2015/4 Advance pricing arrangements.