At Budget 2025, the Government announced its decision to implement the International Controlled Transactions Schedule (ICTS). Finance Act 2026 gave the Commissioners of HM Revenue and Customs (HMRC) the power to introduce regulations requiring “in-scope” multinationals to file an ICTS.
The Government is seeking views on draft regulations, a draft HMRC notice and a draft template illustrating the information that would need to be filed annually via ICTS through a consultation process which closes on 31 July 2026.
What is ICTS?
ICTS is a new annual mandatory reporting obligation for “in-scope” multinationals. It primarily contains quantitative and qualitative details.
Key data points include accounting income and expense for each transaction type, TP methods applied, profit levels earned, explanations of TP adjustments and cost base contents.
Why ICTS matters?
The ICTS will facilitate automated and data-led risk assessment by HMRC, potentially increasing the number of inquiries.
Who is “in scope”?
It is a mandatory requirement for businesses within the scope of the UK TP rules. Failure to submit or inaccuracies in submissions are likely to attract penalties and TP enquiries.
Which entities/ transactions are exempt/excluded from ICTS?
- Transactions covered by Advance Pricing Agreements (APA).
- Transactions relating to a person exempt from the application of transfer pricing rules by virtue of sections 165 or 166 of TIOPA i.e. SMEs (subject to sections 167–168 of TIOPA).
- transactions that are exempt distributions under Part 9A CTA 2009 i.e. dividends.
When does it become due?
- The government intends that the ICTS reporting requirement will take effect for accounting periods beginning on or after 1 January 2027.
What should businesses do now?
Businesses can review their intercompany transactions and assess readiness for this obligation.
This includes:
- Reviewing cross-border related-party transactions including permanent establishment arrangements.
- Understanding what data will be required for ICTS reporting and whether it is currently captured in finance and tax systems.
- Reviewing transfer pricing policies and supporting documentation to ensure they are aligned with the information likely to be disclosed to HMRC.
- Preparing transfer pricing documentation report (e.g. Local file) covering intercompany transactions.
- Monitoring the outcome of the consultation process and any changes to the draft regulations, notice and reporting template before the rules are finalised.
ICTS is not just a new compliance requirement. Given HMRC’s intention to use ICTS data for automated risk assessment, businesses should view ICTS as an opportunity to identify and address potential transfer pricing risk areas before reporting obligations kick in.
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