Transfer Pricing and Developing Economies: A Handbook for Policy Makers and Practitioners by Joel Cooper Randall Fox Jan Loeprick & Komal Mohindra

Author:Joel Cooper, Randall Fox, Jan Loeprick & Komal Mohindra
Language: eng
Format: epub

Box 4.9 Use of Secret Comparable in the United Kingdom

From HMRC’s International Manual:a

INTM467110: Establishing the arm’s-length price: Gathering your own evidence Searching for comparables: Public information

Probably the best potential source of comparable information is HMRC. We hold a detailed breakdown of accounts for every company in the UK, and generally a good amount of detail about the business activities of medium, large, and very large companies. Given a sufficient amount of time, an Officer could probably find either a comparable transaction or a good set of comparable companies.

This information is not available to the taxpayer. The OECD Transfer Pricing Guidelines do not sanction the use of hidden comparables and so you should not use information that is only available to HMRC.

You can object to the use of particular companies presented as comparables from the results of a search of a commercial database if you hold information that suggests conclusively that the company is not actually comparable. You cannot tell the taxpayer why it shouldn’t be used, unless the information you hold is actually within the public domain, but was not available (or was unknown to the researcher) at the time the comparable search was being made.

In practice, an enquiry should not be dependent on such secret comparables. From the facts available to both HMRC and the taxpayer, it should be possible to consider the arm’s-length price.

a. See HMRC, International Manual, available at http://www.hmrc.gov.uk/manuals/intmanual/intm467110.htm.

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