In the Autumn Budget 2025, the UK government confirmed a significant new transfer pricing compliance requirement for multinational businesses: an International Controlled Transactions Schedule (ICTS).
The ICTS will be an annual filing that reports detailed information on cross-border transactions with related parties, and it represents one of the most important shifts in UK transfer pricing compliance in recent years. The measure reflects HMRC’s move toward data-driven risk assessment of transfer pricing. The window for businesses to prepare for this new change is short: the first ICTS reports will cover accounting periods beginning on or after 1 January 2027, meaning initial filings will be due with 2027 tax returns in 2028.
Key Takeaways
Purpose and HMRC’s objectives
The ICTS’s primary goal is to facilitate automated, data-led risk assessment of transfer pricing by HMRC. By collecting standardised transaction data, HMRC aims to spot high-risk pricing arrangements and inconsistencies more quickly.
This is expected to result in better-targeted, shorter inquiries focused on cases with the greatest tax risk, while compliant taxpayers benefit from fewer protracted reviews. The ICTS aligns with broader efforts to close the tax gap through technology and analytics. Notably, HMRC projects the ICTS will raise an additional £875 million in tax revenue by March 2031 through improved transfer pricing compliance.
New annual transfer pricing reporting obligation
In-scope businesses (see below) will need to file an ICTS each year alongside their corporation tax return. This schedule will capture granular data on cross-border intra-group transactions, likely including the identity and jurisdiction of counterparties, transaction types (e.g. services, financing, asset transfers), transfer pricing methods/policies applied, the pricing or margins used, and the total annual transaction values. The draft ICTS template shared by HMRC in 2025 was in spreadsheet form, but the final filings are expected via a secure HMRC online platform.
Broad scope of companies affected (SMEs excluded)
The ICTS requirement will apply to virtually all UK-resident businesses and UK permanent establishments that are subject to UK transfer pricing rules, meaning large multinational groups with cross-border related-party dealings.
Small and medium-sized enterprises will remain exempt under the existing UK transfer pricing SME exemption, which the government decided not to narrow in the 2025 Budget. Nonetheless, HMRC estimates approximately 75,000 UK businesses will fall within ICTS filing scope.
In the recent consultation, HMRC floated a potential minimum threshold of £1 million in aggregate for cross-border related-party transactions per year (with a de minimis of £100,000 per individual transaction category) to determine which groups must file an ICTS. Final thresholds will be confirmed in due course, and certain exclusions (e.g. purely UK-to-UK transactions, exempt dividends, or transactions covered by Advance Pricing Agreements) are expected to reduce unnecessary reporting.
Compliance burden and data readiness
Meeting the ICTS requirements will require a significant compliance effort for many companies. HMRC acknowledges substantial one-off work to adapt systems and ongoing costs to collect and report the necessary data for the 75,000 filers in scope. Many businesses may find their current ERP and reporting systems are not configured to gather transaction-level transfer pricing data with the required granularity. However, the ICTS data is intended to leverage information “readily available” to multinationals (and mirror disclosure practices in countries like Australia where similar schedules exist) in order to mitigate incremental burdens.
The compliance challenge is also an opportunity: by investing in data management and automation, companies can streamline tax reporting and potentially improve the quality and consistency of their transfer pricing data across all compliance obligations.
What does it mean for UK businesses
Businesses should treat the ICTS not just as a compliance exercise but as a chance to fortify their transfer pricing governance. The effort required to compile transaction-level details can be redirected into a strategic review of intercompany pricing policies. By reviewing the ICTS data internally before submission, groups can identify and remediate transfer pricing risks or inconsistencies in advance proactively. This proactive approach will put companies in a stronger position to manage any HMRC inquiries.
It is also noteworthy that while this new reporting will be burdensome, it is part of a global trend toward greater transparency and real-time tax compliance. Tax authorities in several countries have introduced similar transactional reporting requirements and the UK is aligning with international best practices. In the long run, having robust transfer pricing data readily available can help businesses respond more quickly to tax authority queries worldwide and ensure consistency across jurisdictions. In essence, investing in the right processes and technology now will pay dividends by reducing risk and potentially simplifying future compliance.
Finally, there is reassurance for smaller companies: the Government has opted not to pull medium-sized enterprises into the transfer pricing net by changing the SME exemption. Only groups already within the scope of UK transfer pricing rules need to file the ICTS, which limits the burden on true SMEs. However, even mid-sized UK subsidiaries of global groups (if part of large multinational enterprises) may fall under these rules, so such companies should confirm whether they are exempt under current legislation and the forthcoming regulations.
We also expect that some targeted reliefs and safe harbours will be included, for example, not requiring ICTS reporting for transactions already governed by Advance Pricing Agreements or for low-value services below certain thresholds, which could provide some compliance relief. Nonetheless, the overall direction is clear: all large UK businesses must be ready to disclose detailed transfer pricing data to HMRC on an annual basis, and those that are well-prepared will be better placed to manage their compliance obligations.
Suggested next steps
The clock is ticking toward the 2027 start date for ICTS. UK-based multinational businesses should begin preparing now to ensure a smooth implementation and to use this development to their advantage. Crowe recommends the following next steps:
- Assess systems and data readiness: Evaluate whether your current finance and IT systems can extract the required transfer pricing data as outlined in HMRC’s draft ICTS template. Use the draft ICTS as a benchmark to identify any gaps in data capture for example, you may need to gather additional details on transactional flows, transfer pricing methods, or counterparty information that were not previously tracked in your systems. Engage your IT and tax data teams early to scope necessary system enhancements or new reporting solutions.
- Bridge data gaps and strengthen documentation: For each category of controlled transactions, determine what information is missing or not readily available and develop a plan to upgrade processes or tools to collect that data consistently going forward. Ensure that transfer pricing documentation (Master File, Local Files) and Country-by-Country Reports align with the data you will report in the ICTS. Inconsistencies between the ICTS and other filings (or between different periods of ICTS data) could flag a risk for HMRC, so invest time in reconciling your data across all compliance reports.
- Proactively identify and remediate risks: Treat this preparation period as an opportunity to perform an internal transfer pricing risk review. Analyse the collected data for outliers such as unusual profit levels, high-risk transactions, or divergence from policy and address any potential transfer pricing issues before the first ICTS submission. Consider whether any intercompany arrangements need to be realigned or supported with additional analysis (e.g. obtain comparables or renew benchmarking studies) to ensure they are defensible.
By taking these steps now, UK businesses can not only ensure compliance with the ICTS from day one but also leverage the process to strengthen their transfer pricing policies, improve data quality, and minimise future HMRC challenges. Early action and a strategic approach will turn the ICTS from a compliance challenge into an opportunity to enhance your organisation’s tax risk management.
For further information, support or advice on the International Controlled Transactions Schedule (ICTS), please get in touch.
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