Transfer Pricing Policy, Documentation and Defence
Written and reviewed by the International Tax Accountants editorial team. Last reviewed 29 July 2026.
Transactions between connected companies have to be priced as if the companies were independent. That arm's length principle sits in TIOPA 2010 Part 4, and it applies to intra-group sales, services, financing and licensing whenever the parties are under common control.
Our engagement is to make that principle hold up in practice. We set the pricing policy, evidence it with benchmarking, write the documentation HMRC expects to see, and stand behind the position if it is challenged.
What the Transfer Pricing Engagement Covers
We design the transfer pricing policy for each category of intra-group dealing, select and apply the appropriate method, and benchmark it against independent comparables so the pricing can be shown to be at arm's length under TIOPA 2010 Part 4.
Where a group is within Country-by-Country Reporting scope, meaning consolidated revenue of 750 million euro or more, we prepare master file and local file documentation to the standard required by the Transfer Pricing Records Regulations 2023 for periods beginning on or after 1 April 2023.
We also assess whether the small or medium-sized enterprise exemption applies. Small and medium groups can be exempt, though HMRC can direct a medium enterprise to apply the rules, and the exemption does not extend to transactions with non-treaty territories.
Where Transfer Pricing Gets Contentious
The disputes centre on comparables and on financing. Two advisers can reach different arm's length ranges from the same data, so the benchmarking has to be built carefully and documented in a way that survives challenge. Intra-group loans and guarantees are a particular flashpoint.
The rules are also moving. The Autumn Budget 2025 announced a new International Controlled Transactions Schedule, and confirmed that medium-sized enterprises keep the exemption. That change is announced rather than enacted, with no commencement date yet, so we prepare for it in line with HMRC's transfer pricing guidance without treating it as live law.
How We Build the Documentation
We begin by mapping the controlled transactions across the group and deciding which method fits each one. We then run the benchmarking, document the functional analysis, and assemble the master file and local file so they read as a coherent, defensible record rather than a box-ticking exercise.
Where a position is queried, we handle the correspondence and stand behind the analysis. Because the documentation is built to a consistent standard each year, it also feeds cleanly into the wider corporation tax return, which we can run alongside as a cross-border corporate tax engagement.
What Transfer Pricing Support Costs
We work to a fixed fee agreed before we start, scoped against the number of controlled transactions and whether full master file and local file documentation is required. Benchmarking studies and a defence file are priced within that scope so there are no surprises.
You can get an overview of how the engagement sits next to the rest of our work from the international tax accountants homepage.