The Profit Diversion Compliance Facility (‘PDCF’) opened in January 2019 to encourage businesses, not already under enquiry, to review their transfer pricing positions and produce a disclosure report and proposal to address any high-risk positions taken.
The changing background to the PDCF:
- HMRC is now focusing more resource on transactions and structures they see as diverting profits from the UK to low-taxed jurisdictions.
- HMRC has adopted an evidence-based approach to its investigations relying heavily on ‘the facts on the ground’. This puts increasing emphasis on contemporaneous material- such as emails, professional advice received, sales and intra-group contracts.