Transfer Pricing Reporting: The New ICTS for UK Subsidiaries
If your UK company is part of an overseas group, new transfer pricing reporting is expected to be heading your way. The International Controlled Transactions Schedule (ICTS) was confirmed at the Autumn Budget 2025. It’s expected to apply for accounting periods beginning on or after 1 January 2027, with the first filings landing alongside your Corporation Tax return.
The ICTS is a structured, annual report of your cross-border transactions with related parties. HMRC will use it to profile transfer pricing risk and decide where to open enquiries. The detail is still being settled. A technical consultation on the draft regulations is due in spring 2026.
This isn’t a distant problem. The data you’ll need sits in your intercompany ledgers now, and getting it filing-ready takes planning. Here’s what’s coming and where the work lies.
What the New Transfer Pricing Reporting Covers
The International Controlled Transactions Schedule is a new mandatory return for businesses inside the UK transfer pricing rules. It captures cross-border dealings between connected parties: sales of goods and services, royalties, management charges, and intercompany loans.
You report in a fixed, structured format. The draft template includes aggregated tables by transaction type, counterparty and pricing method. It also includes loan data above set thresholds and a set of binary risk indicators. Those indicators are the part to watch. They flag positions HMRC considers higher risk, and they feed an automated risk assessment.
The reporting trigger is broad. Where the total value of relevant cross-border related-party transactions exceeds £1m in the period, the schedule is expected to be in scope. There’s no netting of amounts to get under the line.
Who This Affects
This lands squarely on UK subsidiaries of global groups, which is a large part of who we work with. If you buy from, sell to, lend to or borrow from an overseas company in your group, you’re the kind of business HMRC has in mind.
The scope reaches further than that. It covers UK companies with foreign permanent establishments, and UK permanent establishments of non-resident companies. If your group has any cross-border footprint touching the UK, the schedule is worth checking against your figures early.
There’s one important piece of good news.
The SME Exemption Survived
HMRC originally proposed removing the transfer pricing exemption for medium-sized enterprises. That would have pulled many more UK companies into the rules. After consultation, the government dropped the idea.
Small and medium-sized enterprises keep their existing exemption from UK transfer pricing. So if your group is genuinely within the SME thresholds, the ICTS and the wider rules may not bite at all. The catch is that the thresholds test the whole worldwide group, not just your UK entity. A small UK subsidiary of a large multinational is not an SME for this purpose.
Working out which side of that line you sit on is the first question, and it’s rarely as obvious as it looks.
Why This Is Harder Than It Looks
On paper, the ICTS reports data you should already hold. In reality, the data rarely sits in one place or one format.
Intercompany figures often live in the parent’s systems, priced under a global policy set abroad. Your UK accounts record the entries, but not always in the categories the schedule demands. Pulling counterparty-level, transaction-type-level data into HMRC’s structure is a real exercise, and the binary risk flags mean presentation matters. A return that lights up the risk indicators invites an enquiry, even where your pricing is sound.
This also sits on top of wider change. Most of the transfer pricing, permanent establishment and Diverted Profits Tax reforms apply for periods beginning on or after 1 January 2026. UK-to-UK transactions are largely taken out of the rules. The permanent establishment definition moves closer to the OECD model. Diverted Profits Tax is folded into Corporation Tax. The ground under your UK filings has shifted.
The timing on the ICTS itself isn’t fully locked. The schedule has been flagged before and the start date has moved, so a further deferral can’t be ruled out. HMRC has signalled the 2027 start without treating it as immovable. The direction of travel is settled, though, and the prudent assumption is that it’s coming.
The Line Between Pricing and Filing
It helps to separate two jobs that often get blurred.
One job is setting the transfer pricing itself: deciding the arm’s-length price for intercompany dealings, and building the economic analysis behind it. That’s specialist work, usually owned by your group’s tax function or a dedicated transfer pricing adviser. We don’t do that part, and we’d be wary of anyone offering to bolt it on lightly.
The other job is the UK filing layer. That means getting the figures into your Corporation Tax return correctly, preparing the ICTS from the group’s agreed positions, and handling HMRC on the UK side. That’s our territory, and it’s where a lot of UK subsidiaries need a steady local hand.
How Hamlyns Can Help
We handle the UK corporation tax filing for subsidiaries of overseas groups. That’s our role here, and we’re clear about its edges.
We prepare your CT600 and bring the group’s transfer pricing positions through into the UK return accurately. We work alongside your transfer pricing adviser, rather than replacing them. We manage HMRC correspondence on the UK filing. And we help you map your intercompany data to what the ICTS will demand, so the first filing isn’t a scramble.
If you’re a UK subsidiary weighing up this new transfer pricing reporting, the sensible first step is a conversation about your UK filing position and how your group data flows into it. Please get in touch with the Hamlyns team, or read more about our business tax and corporation tax services. We’ll tell you plainly what we handle, and where your group’s transfer pricing specialist needs to lead.
