UK Raises £388 million from Diverted Profits Tax Law in 2017-18

UK Raises £388 million from Diverted Profits Tax Law in 2017-18

The UK tax authority, HM Revenue and Customs (HMRC), raised GBP388m from the diverted profits tax (DPT) legislation in 2017-18, according to the Transfer Pricing and Diverted Profits Tax Statistics published on July 31.

The figures of DPT yield reflect amounts received as a result of DPT charging notices issued by the HMRC, and additional amounts of corporation tax resulting from behavioral change. The amount raised from the issue of DPT charging notices in 2017-18 was GBP219m.

During the period, the HMRC issued 200 DPT preliminary notices to 28 businesses and 190 DPT charging notices to 22 businesses.

In 2017-18, the HMRC secured GBP1.6bn of additional tax by challenging the transfer pricing arrangements of multinationals corporations. The length of inquiries reduced slightly, with the average age of settled inquiries at 25 months, as compared to 29 months in the previous year.

HMRC taking longer to resolve MAP cases, reach ATCAs

The Government has also provided specific details on advance pricing agreements (APAs), advance thin capitalization agreements (ATCA), and mutual agreement procedure (MAP).

The HMRC admitted 103 new MAP cases in 2017-18, up from 80 cases in the previous year. The HMRC resolved 71 MAP cases during the review period (as against 36 in the previous year) and took an average of 27.5 months (as compared to 24.4 months in the previous year) to resolve MAP cases.

The statistics show a decrease in the number of APA applications made in 2017-18, but an increase in the number of APAs agreed in the year. The average time to reach an agreement increased slightly from 32.8 months in the previous year to 37.1 months.

In contrast, the total number of ATCAs agreed in 2017-18 reduced to 79, as compared to 124 in the previous year. Further, the average time to reach an ATCA increased to 17.5 months, as compared to 14.9 months in the previous year.