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HMRC profit diversion compliance facility: are you really BEPS-compliant?

HMRC profit diversion compliance facility

HMRC question whether businesses are BEPS-compliant.


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HMRC’s recent introduction of a new Profit Diversion Compliance Facility (the facility) is a clear signal of their commitment to implementing the Base Erosion and Profits Shifting (BEPS) agenda. Although diverted profits tax (DPT) compliance and review of transfer pricing policies will be a large part of any multinational’s decision on how to respond to the facility, the question for a company is not just whether its transfer pricing policies are up-to-date but, more widely, whether its structure is demonstrably BEPS-compliant. After recent enquiries into profit diversions found businesses with serious deficiencies, HMRC have warned that there will be further investigations in this area and, by launching the facility, have opened an opportunity for taxpayers to self-report. HMRC have also warned that their Fraud Investigation Services could be involved in these further investigations, which indicates the seriousness with which HMRC are treating this issue.

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