HMRC’s Transfer Pricing and Diverted Profits Tax Data Sends a Clear Message to Multinationals

HMRC’s latest figures show a sharp rise in transfer pricing yield, longer enquiry timelines, and a continued focus on profit diversion. For large groups with UK operations, this is not just a statistical update. It is a sign that international tax risk remains high on HMRC’s agenda. The latest publication, released on 11 March 2026, shows a transfer pricing yield of £3.387 billion for 2024–25, up from £1.786 billion a year earlier. At the same time, the average age of settled transfer pricing enquiries rose to 41 months.

At Apex Accountants, we see this data as important for any multinational group, UK subsidiary, or mid-sized business with cross-border related-party transactions. The numbers point to a tougher and more persistent compliance environment. They also arrive just as the UK moves away from Diverted Profits Tax as a standalone regime and toward the new Unassessed Transfer Pricing Profits, or UTPP, rules for accounting periods beginning on or after 1 January 2026.

Snapshot of Transfer Pricing and Diverted Profits Tax

Measure	2023–24	2024–25	What it suggests
Transfer pricing yield	£1.786bn	£3.387bn	HMRC secured much more tax from international tax work
Settled enquiry cases	128	143	Case closures rose, but not dramatically
Average age of settled enquiries	33.1 months	41.0 months	Disputes are taking longer to resolve
HMRC staff on international tax issues	395	392	Resource stayed broadly stable
APAs agreed	27	26	Advance certainty remains available
MAP cases resolved	86	115	Double tax dispute resolution activity increased
DPT net amount	£108m	£94m	The direct DPT take fell, even while wider diverted profits work remained significant

What UK transfer pricing rules means in simple terms

Transfer pricing is about how connected companies price transactions between themselves for tax purposes. That includes charges for goods, services, financing, royalties, and other cross-border dealings inside the same group. UK transfer pricing rules are based on the arm’s length principle. HMRC requires these transactions to follow the same pricing standards used between independent businesses.

Transfer pricing plays a key role in deciding how much profit is reported for UK tax purposes. If HMRC believes too little profit has been allocated here, it can challenge the position and increase taxable profits. Under UK rules, a transfer pricing adjustment can increase taxable profits or reduce a loss. It cannot reduce profits or increase a loss.

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Why the 2024–25 figures matter

The headline number is the £3.387 billion transfer pricing yield. That is the highest figure in the six-year data series shown by HMRC. It is almost double the previous year’s result. Even without a huge increase in settled case numbers, the yield surge suggests HMRC closed some large and complex cases with significant tax at stake. That is an inference from the published figures, not a statement HMRC makes directly.

The second key point is timing. Settled enquiries averaged 41 months in 2024–25, up from 33.1 months in 2023–24. For finance teams, that means international tax disputes can remain open for years. The cost is not only tax. It also means management time, documentation pressure, audit scrutiny, and uncertainty in forecasting.

HMRC assigned 392 full-time equivalent staff to handle international tax issues concerning multinational businesses in 2024–25. The modest change from the prior year suggests enforcement efforts remain steady.

UK Diverted Profits Tax is changing, but the risk is not disappearing

Diverted Profits Tax, or DPT, was designed to push large companies away from contrived arrangements that reduce UK tax liabilities. HMRC’s latest statistics say DPT will be repealed and replaced by UTPP for accounting periods beginning on or after 1 January 2026. The new rules are intended to retain the core features of DPT but move the charge into the corporation tax regime.

That change matters for two reasons. First, DPT does not vanish overnight. It still applies to earlier accounting periods. Second, the policy direction is continuity rather than retreat. According to the government, UTPP will preserve the reach of DPT and apply to similar structures in a similar way.

There is also a practical upside for some businesses. Government material says UTPP will sit within the UK’s treaty network, and businesses subject to UTPP should be able to use the Mutual Agreement Procedure to deal with double taxation in the usual way. That was a welcome point in the consultation response.

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The wider diverted profits picture is still substantial

Although DPT’s net amount for 2024–25 was £94 million, HMRC’s wider diverted profits results were much larger. The department reported £1.769 billion of additional tax, mainly corporation tax, from transfer pricing-settled investigations into diverted profits in 2024–25. Since DPT was introduced in 2015–16, HMRC says more than £10.5 billion has been secured.

By the end of March 2025, HMRC was reviewing approximately 53 multinational cases linked to profit diversion, with roughly £3.5 billion of tax at stake. That shows the compliance pipeline remains active even while the legal framework evolves.

Why PDCF still matters

The Profit Diversion Compliance Facility gives multinational groups a route to review and disclose outstanding liabilities linked to profit diversion. HMRC first launched it in January 2019. In the latest statistics, HMRC says over £872 million of additional revenue has been secured from resolution proposals and behavioural change since their introduction, and that around three quarters of targeted large businesses used the facility.

For some groups, that makes PDCF a risk-management tool rather than a sign of failure. A voluntary review, backed by proper documentation and technical analysis, can be far better than waiting for a long enquiry or a formal notice.

What businesses should do now

If your group has UK cross-border related-party transactions, this is the time to review the basics.

• Check whether intercompany pricing still matches the arm’s length principle
• Refresh transfer-pricing documentation and benchmarking
• Review financing arrangements, royalties, and service charges
• Revisit permanent establishment and profit diversion risks
• Consider whether past periods need correction or disclosure
• Prepare for the move from DPT to UTPP from 1 January 2026 for relevant accounting periods
• Assess whether MAP, APA, or PDCF could reduce uncertainty in the right case

How We Help Businesses in UK

At Apex Accountants, we help businesses manage international tax risk in a practical and commercially focused way.

Our support includes:

• transfer pricing risk reviews
• intercompany pricing policy reviews
• documentation support and evidence packs
• cross-border finance and royalty reviews
• profit diversion risk assessments
• HMRC enquiry support
• APA and MAP support
• tax governance and compliance planning for multinational groups

We focus on clarity, defensible positions, and early action. That is especially important when HMRC enquiries now routinely stretch over several years.

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Conclusion

HMRC’s 2024–25 transfer pricing and diverted profits data is a warning sign, not just a technical update. The yield is up sharply. Enquiries are taking longer. Profit diversion remains a live issue. And from 1 January 2026, UTPP will carry that policy forward inside the corporation tax regime.

For businesses with cross-border group transactions, the message is simple. Review your position early, document it properly, and do not treat transfer pricing as a year-end formality. In the current HMRC climate, weak documentation and old assumptions can become expensive. 

FAQs About HMRC’s Transfer Pricing and Diverted Profits Tax

What is transfer pricing?

It refers to the pricing applied to transactions between related companies within the same group. UK tax rules require these prices to match what independent businesses would reasonably agree to in similar circumstances.

What is the Diverted Profits Tax?

It is an anti-avoidance rule targeting large companies that shift profits away from the UK tax base. It still applies to earlier periods, even though UTPP will replace it for future ones.

What is UTPP?

UTPP stands for Unassessed Transfer Pricing Profits. It is the replacement for DPT for accounting periods beginning on or after 1 January 2026, with the charge brought into the corporation tax regime.

Do SMEs need to worry about transfer pricing?

Many small and medium-sized enterprises are still exempt under current UK rules, though there are exceptions and the government has consulted on changes to the SME exemption, including removing the exemption for medium-sized enterprises.

What is an APA?

An Advance Pricing Agreement is an agreement with HMRC that establishes the transfer pricing approach for particular transactions over an agreed period, helping limit future tax disputes.

What is MAP?

The Mutual Agreement Procedure is a treaty-based process that tax authorities use to resolve double taxation disputes. HMRC resolved 115 MAP cases in 2024–25, and UK transfer pricing MAP cases outperformed the global average resolution time in OECD statistics for calendar year 2024.