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Transfer Pricing Advisory
Get Your Intercompany Pricing Right from the Start
As your business expands internationally, transfer pricing becomes one of the most important tax issues to manage. It is not only a compliance requirement, but a key part of how your group supports its wider tax position, withstands scrutiny and prepares for future growth.
We help you put in place a proportionate transfer pricing framework that reflects your company’s facts and circumstances, clearly articulates where value is created and provides a position that is robust and supportable.
We help you put in place a proportionate transfer pricing framework that reflects your company’s facts and circumstances, clearly articulates where value is created and provides a position that is robust and supportable.
What is Transfer Pricing?
Transfer pricing refers to the pricing of goods, services, financing and intellectual property between companies within the same group. Where a group operates across more than one country, tax authorities will consider whether those transactions have been priced on terms that would apply between independent parties. This is known as the arm’s length principle.
The OECD Transfer Pricing Guidelines provide an important international reference point, but local rules and administrative practice vary by jurisdiction. Getting transfer pricing right is therefore essential. If pricing is not aligned to the underlying facts, the consequences can include double taxation, penalties, increased scrutiny and issues arising during due diligence.
The OECD Transfer Pricing Guidelines provide an important international reference point, but local rules and administrative practice vary by jurisdiction. Getting transfer pricing right is therefore essential. If pricing is not aligned to the underlying facts, the consequences can include double taxation, penalties, increased scrutiny and issues arising during due diligence.
The Challenges We Solve
Transfer pricing is a complex area of tax where the detail matters and no two businesses are exactly alike. For scaling groups, particularly in the technology sector, that complexity often increases as the business evolves through expansion into new markets, new entities, new products and changing operating models.
Many businesses are unsure which intercompany transactions require attention, how those arrangements should be supported, and what level of documentation is needed. At the same time, transfer pricing rules and expectations continue to develop, particularly in relation to documentation, reporting and cross-border transparency.
We help clients bring clarity to this complexity by identifying the transactions that matter, establishing a supportable position and working alongside other advisers where local implementation or legal input is needed.
Many businesses are unsure which intercompany transactions require attention, how those arrangements should be supported, and what level of documentation is needed. At the same time, transfer pricing rules and expectations continue to develop, particularly in relation to documentation, reporting and cross-border transparency.
We help clients bring clarity to this complexity by identifying the transactions that matter, establishing a supportable position and working alongside other advisers where local implementation or legal input is needed.
When Should You Start Thinking About It?
Transfer pricing can become relevant earlier than many businesses expect. It is often seen as an issue for larger multinational groups, but in practice it should be considered as soon as there are cross-border transactions between related parties.
At an early stage, it is important to understand which entities perform which activities, where value is created and how funds move across the group. Building that clarity early makes it easier to establish a supportable framework as the business grows.
We help clients assess these arrangements in a practical and proportionate way, and work alongside legal and local advisers where implementation in other jurisdictions is required.
At an early stage, it is important to understand which entities perform which activities, where value is created and how funds move across the group. Building that clarity early makes it easier to establish a supportable framework as the business grows.
We help clients assess these arrangements in a practical and proportionate way, and work alongside legal and local advisers where implementation in other jurisdictions is required.
What This May Include:
Opening or acquiring an entity outside the UK that will transact with other group companies
Building teams through overseas group entities, where responsibilities and value creation span jurisdictions
Centralising functions such as engineering, product development or marketing
Moving code, intellectual property or brand ownership between entities
Entering into cross-border intercompany funding arrangements
Operating customer or commercial arrangements where more than one group company performs key functions or shares in the return
Key Areas Requiring Particular Care
Intellectual Property: It is important to be clear which entity develops, owns and controls the group’s intellectual property, which entity bears the associated development risk, and which entities are entitled to use it. The pricing of those arrangements will depend on the functions performed, assets used and risks assumed, and tax authorities will closely examine whether the legal position is supported by the underlying substance.
Multi-Entity Customer Arrangements: Where more than one group entity is involved in originating, contracting for, delivering or supporting customer relationships, it is important that the transfer pricing outcome reflects those contributions appropriately. The contractual position should be consistent with the commercial reality, and the intercompany arrangements should support that analysis.
Multi-Entity Customer Arrangements: Where more than one group entity is involved in originating, contracting for, delivering or supporting customer relationships, it is important that the transfer pricing outcome reflects those contributions appropriately. The contractual position should be consistent with the commercial reality, and the intercompany arrangements should support that analysis.
Distributed Teams and Decision-Making: Where leadership, product development, commercial decision-making and wider team activity are spread across jurisdictions, transfer pricing can become more complex. Understanding how decisions are made, where key activities take place and how different entities contribute is important in establishing a position that is coherent and supportable.
Intercompany Funding: Where one group company provides funding to another, the terms should reflect the amount advanced, the duration of the arrangement and the risk profile of the borrower. It is also important to retain clear records explaining the basis on which the arrangement was entered into and how the pricing has been determined.
Intercompany Funding: Where one group company provides funding to another, the terms should reflect the amount advanced, the duration of the arrangement and the risk profile of the borrower. It is also important to retain clear records explaining the basis on which the arrangement was entered into and how the pricing has been determined.
Why Growing Companies Choose Onside
Most of our new clients come through referrals, reflecting the trust our clients place in us and their confidence in recommending our work.
Responsive and accessible support, with proactive advice and a tax partner who feels like part of your team.
Experienced support through HMRC enquiries, with a focus on achieving the right outcome when it matters most.
Specialist expertise across transfer pricing and wider tax advisory matters, including EMI, R&D, and SEIS/EIS.
How We Work With Businesses and Their Founders
Understand the business: We start by understanding your group structure, how each entity operates, and where value is created across the business. This helps identify the intercompany arrangements that need attention and the areas of greatest transfer pricing risk.
Establish a practical framework: We work with you to put in place a transfer pricing framework that reflects your specific facts and circumstances, is consistent with the arm’s length principle, and is practical to operate as the business grows.
Support documentation and implementation: We help you build the documentation and supporting analysis needed to evidence your position clearly. Where legal agreements or local implementation are required, we work alongside your wider adviser network to ensure the approach is reflected appropriately.
Provide ongoing support: Transfer pricing should evolve as your business does. We provide ongoing support as structures change, new transactions arise and tax authority expectations develop, and we assist with HMRC or overseas enquiries where needed.
FAQs
Transfer pricing becomes relevant when a business has transactions between connected companies in different countries, for example management charges, development costs, intercompany loans, recharges of staff costs, or the use of intellectual property developed or owned in one country by group companies operating in others. For early-stage groups, the key point is not necessarily producing a lengthy report on day one, but making sure there is a clear commercial rationale for how costs, risks and profits are shared. It is usually much easier to put a sensible policy in place before the numbers become material, rather than trying to amend the position later.
A transfer pricing policy should be reviewed when the business changes, not just when accounting / tax deadline are approaching. Common triggers include overseas expansion, new funding rounds, hiring senior people in another jurisdiction, launching new revenue streams, moving intellectual property, or introducing new intercompany charges. A light-touch review can often confirm that the existing approach remains appropriate, but fast growth can quickly change where value is being created and where profits should sit.
The level of documentation depends on the size of the group, the jurisdictions involved and the nature and value of the intercompany transactions. Many fast-growing businesses will not need a full OECD-style Master File and Local File immediately, but they should still keep enough evidence to explain their approach. This might include a functional analysis, intercompany agreements, the basis for recharges or margins, and support for why the pricing is commercially reasonable. The aim is to have proportionate, practical documentation that can grow with the business.
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