Diverted Profits Tax

Since the BEPS project, HMRC is now much more prepared to set quite challenging expectations of potential additional tax yield from TP or DPT enquiries, often well ahead of fully evaluated and developed technical positions.

DPT is a key priority for HMRC, with significant resources being invested by the tax authority with the aims of taxing profits that are considered diverted from the UK and ultimately changing the behaviours of businesses.

DPT is a priority area for HMRC such that they are devoting a significant amount of resource to uncovering cases where there is a diversion of profits from the UK. HMRC are taking an increasingly detailed approach to investigating cases where DPT could apply, leading to far-reaching information requests.

DPT is a new and separate tax introduced by the UK as a response to the OECD’s Base Erosion and Profit Shifting (BEPS) agenda. However, it closely interacts with both existing and new tax rules such that the impact of these interactions also needs to be carefully considered.

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