HM Revenue & Customs (HMRC) recently published additional guidance on the proposed International Controlled Transactions Schedule (ICTS), which would require certain U.K. taxpayers to report detailed information regarding cross-border related-party transactions and permanent establishments. For U.S.-based multinational groups with U.K. operations, the ICTS is expected to be an annual filing requirement submitted with the U.K. corporate tax return. The requirement is expected to apply for accounting periods beginning on or after January 1, 2027, with first filings generally expected in 2028. HMRC has indicated that the ICTS will be used to support risk assessment before opening a formal tax inquiry.
Who May Be Affected by ICTS Reporting?
The ICTS is expected to be relevant for midsize and larger U.S. multinational groups with U.K. corporate tax filing obligations and material cross-border related-party activity involving the United Kingdom. This may include U.S.-parented groups with U.K. subsidiaries, U.K. permanent establishments, or U.K. holding or operating companies. Groups that qualify as the U.K.’s designated “small and medium-sized enterprises” are generally expected to remain outside the regime, consistent with the current U.K. transfer pricing exemption framework.
Purpose & Proposed Reporting Requirements
The ICTS reflects a broader trend among tax authorities toward obtaining more detailed transaction-level data earlier in the tax compliance process. In its November 2025 transfer pricing policy paper, HMRC stated that the ICTS is intended to identify transfer pricing risk more accurately and focus compliance activity more efficiently. For U.S. multinationals, this means U.K. intercompany transactions may be subject to more standardized and data-driven scrutiny, even where existing U.S. and global transfer pricing documentation is already in place. HMRC also estimated that approximately 75,000 businesses may be affected in aggregate, with one-time and ongoing administrative costs related to systems updates, implementation, and data collection.
HMRC’s June 2026 technical consultation includes draft regulations, a draft HMRC notice, and an illustrative ICTS template. Based on the most recent template, in-scope U.K. taxpayers may need to report detailed quantitative and qualitative information, including:
- Transaction categories
- Counterparties or counterparty jurisdictions
- Transfer pricing methods
- Transaction values
- Pricing outcomes
- Information related to financing, intangibles, profit splits, and permanent establishment dealings
For U.S.-parented groups, this may require coordination between U.S. and U.K. transfer pricing, finance, and local accounting teams to help ensure U.K. filings are consistent with U.S. and global transfer pricing positions. The final requirements may change as the consultation process and implementing regulations are finalized.
Practical Implications: Readiness & Data Management Considerations
The main practical issue for U.S. multinational groups with U.K. operations is whether they can extract and reconcile the data required to complete the ICTS. Taxpayers that have transfer pricing documentation in place may still face challenges if the underlying transaction data does not tie to accounting records, intercompany agreements, local filing disclosures, statutory accounts, and tax returns. As a result, the ICTS may create a practical need to review not only U.K. transfer pricing documentation, but also the systems and processes used to identify, price, record, and reconcile U.K.-related intercompany transactions.
How Forvis Mazars Can Help
U.S. multinationals with U.K. operations should begin preparing before the requirement becomes effective. Practical next steps include mapping relevant U.K. cross-border related-party transactions, assessing data availability, reviewing the consistency of transaction characterizations and pricing policies, and determining whether existing documentation supports the positions that would be illustrated through the ICTS. Our experienced International Tax team can help U.S. multinationals gauge readiness, identify practical data gaps, review documentation and intercompany agreements, and create processes to support future U.K. reporting. If you have any questions or need assistance, please reach out to a professional at Forvis Mazars.