Voluntary disclosures facility for MNEs cross-border arrangements

11 January 2019

Multinational (MNEs) companies have been given an opportunity to voluntarily disclose any uncertainties or inaccuracies with their cross-border arrangements to HM Revenue and Customs (HMRC) under the Profit Diversion Compliance Facility.

HMRC’s intention for launching the facility is to encourage businesses to disclose their cross-border arrangements and in return face lower penalties than they would otherwise have been required to pay, but more importantly they are less likely to face a criminal investigation. 

Not surprisingly, HMRC’s guidance is very clear in stating that it has found MNEs’ cross border pricing arrangements are not up to date with current legislation and/or with their own changing business practices and the focus is likely to be on profits diverted from the UK and on international businesses who operate in low tax or no tax jurisdictions.

There are whispers that HMRC has made a ‘wish list’ of businesses it considers are potentially at a risk.  They may issue cautionary letters to businesses.  It would be wise to seek expert advice if you do receive such a letter or need to review your cross-border arrangements.  

For any questions about this blog, please contact me.  For advice on your cross-border arrangements, get in touch with your local UHY adviser.