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Transfer pricing documentation for UK MNEs

Transfer pricing documentation for UK MNEs

Should UK parented multinationals be considering the voluntary preparation of master file and local file documentation?

Daniel Head

Partner, National Head of Transfer Pricing in the UK

KPMG in the UK


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The UK has not formally implemented the requirement for master file and local file documentation. However, HMRC have issued guidance which reflects the OECD recommendations – broadly that transfer pricing documentation should be proportionate to the size and complexity of the transactions or business involved and should demonstrate that the transfer pricing meets the arm’s length standard. Therefore, whilst there is no strict UK requirement for a master file or local file, we believe that two factors may lead UK multinational entities (MNEs) to consider voluntarily preparing such documentation, albeit scaled appropriately to the specific facts and circumstances of the business in question.

Firstly, UK headquartered MNEs will be subject to requests to share their master file by overseas tax authorities seeking to use that document in conjunction with the country by country (CbC) report to assess the level of transfer pricing risk in their jurisdiction. In this regard, the master file and local file will be key in explaining the picture presented by the CbC report.

Secondly, we believe that the overall direction of travel is for greater clarity and transparency over the tax affairs of MNEs and therefore we believe it is quite possible that we will see a shift in HMRC's approach in future years.

HMRC’s guidance can be found here. For more information on the most appropriate approach to transfer pricing documentation for your business, please contact Daniel Head.

For further information please contact:

Daniel Head

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