HMRC is consulting on the detailed design of a new International Controlled Transactions Schedule, known as ICTS.

The requirement is expected to apply for accounting periods beginning on or after 1 January 2027 and would require in-scope businesses to report certain cross-border related party transaction information to HMRC each year.

For directors and finance leaders in groups with cross-border related party transactions or permanent establishment dealings, the practical point is not simply that another form may be needed. ICTS is intended to give HMRC more standardised data for transfer pricing risk assessment, so intercompany arrangements will need to be clearly identified, supported and capable of being explained.

HMRC launched the technical consultation on 16 June 2026, with responses due by 31 July 2026. The consultation covers draft regulations, a draft HMRC notice and a draft template showing the type of information that may need to be filed annually. You can read the official consultation here: Transfer pricing: International Controlled Transactions Schedule.

Who is likely to be affected

The draft rules also include proposed materiality thresholds and targeted exemptions, so not every cross-border related party transaction will necessarily require reporting.

HMRC describes ICTS as a reporting requirement for in-scope multinationals. The consultation is particularly relevant to businesses within the scope of UK transfer pricing or permanent establishment legislation.

In broad terms, this may include UK entities or UK permanent establishments with cross-border related party transactions. That could involve dealings with an overseas parent, subsidiary, branch or other group entity.

The government has confirmed that SMEs will continue to benefit from the existing transfer pricing exemption. However, groups should still check the detailed scope carefully, particularly where permanent establishments are involved or where an exemption may not apply.

However, for larger or more complex groups, the direction is clear. Cross-border related party dealings are likely to need clearer identification, better documentation and more consistent reporting to HMRC.

Why this issue is becoming more important

International tax has been moving towards greater transparency and more data-led risk assessment.

ICTS is intended to help HMRC identify transfer pricing risk more accurately and efficiently. The information reported through the schedule is expected to support both automated, data-led risk assessment and manual review by HMRC compliance teams.

For groups with cross-border related party transactions and permanent establishment dealings, that matters.

Several pressures sit behind the need to review the position early:

• HMRC is seeking more standardised information about cross-border controlled transactions.
• Investors and buyers often review transfer pricing closely during due diligence.
• Group boards may need clearer evidence that intercompany arrangements are commercially supportable.
• Lenders may consider how international dealings affect reported profits, cash flow and tax risk.
• Transfer pricing positions carried forward from prior years may no longer be sufficiently documented.

This does not mean every intercompany transaction is problematic. It means the group should be able to explain what the transaction is, who it is with, how it is priced and why that position is supportable.

What ICTS could require businesses to report

The detailed form of the requirement is still subject to consultation and final regulations.

However, the draft materials indicate that HMRC is seeking structured information about cross-border related party transactions. This may include information on the nature and value of transactions, the parties involved, the jurisdictions concerned and the transfer pricing method applied.

For finance teams, the practical challenge is likely to be less about the concept and more about the data.

A group may need to identify and organise information such as:

• Management charges.
• Intragroup services.
• Royalties or licence fees.
• Financing arrangements.
• Guarantees.
• Sales or purchases between related parties.
• Asset transfers.
• Branch or permanent establishment dealings.
• The transfer pricing method used.
• The records supporting the pricing approach.

Where this information is already clear, the reporting process should be easier to manage. Where arrangements are informal, poorly documented or spread across several systems, the work may take longer than expected.

What a good process should feel like

Responding well to ICTS should be a planning exercise, not a deadline scramble.

A sensible process should include:

• Early identification of which entities or permanent establishments may be in scope.
• A clear list of cross-border related party transactions.
• Confirmation of whether the SME exemption applies.
• Review of current transfer pricing documentation.
• Reconciliation between statutory accounts, tax records and internal reporting.
• Clear ownership of who maintains transfer pricing records.
• Timely communication between the finance team, tax advisers and group management.

The aim is not to create paperwork for its own sake. It is to make sure the group can report accurately and explain its position if HMRC asks further questions.

Why senior involvement matters

Transfer pricing is rarely just a form-filling issue.

The pricing of intercompany services, financing, royalties or asset transfers often depends on commercial judgement. It requires an understanding of what each entity does, what risks it bears, what assets it uses and how value is created across the group.

Senior involvement tends to matter most when:

• The business is expanding overseas.
• The group has multiple entities or permanent establishments.
• Intragroup services or management charges are material.
• Financing or guarantee arrangements exist between related parties.
• The group is preparing for investment, funding or sale.
• Previous transfer pricing documentation is limited or outdated.
• The board needs clearer visibility over international tax risk.

In these situations, the question is not simply whether a schedule can be completed. It is whether the group understands and can support the position being reported.

Common issues to address early

Most transfer pricing reporting difficulties stem from preparation and record-keeping rather than the rules themselves.

Common issues include:

• Intercompany transactions not being clearly identified.
• Limited documentation of how pricing was determined.
• Pricing arrangements being carried forward year after year without review.
• Inconsistent descriptions of the same transaction across accounts, tax records and management reports.
• Poor evidence for management charges or intragroup services.
• Unclear responsibility for maintaining transfer pricing documentation.
• Incomplete data on counterparties, jurisdictions or transaction values.
• Issues being identified too late to resolve calmly before filing.

None of these issues automatically means the group has taken the wrong tax position. They do, however, make the position harder to explain.

Questions to ask before 2027

A short review before the ICTS requirement begins may save difficulty later.

Useful questions include:

• Are we within the scope of UK transfer pricing or permanent establishment rules?
• Does the SME exemption apply to us?
• Which entities have cross-border related party transactions?
• Can we identify the value and nature of each transaction?
• Can we explain how intercompany pricing was set?
• Is our transfer pricing documentation current?
• Do statutory accounts, internal reporting and tax records tell a consistent story?
• Who is responsible for maintaining the information that may be needed for ICTS?
• If HMRC or a buyer’s adviser reviewed our position, what would they question first?

These questions help move the issue away from a year-end reporting exercise and towards a more controlled process.

How this supports better decision-making

It would be easy to treat ICTS as another compliance requirement.

The more useful view is that preparing for it can improve the group’s understanding of its cross-border activity.

Working through the position can highlight:

• Weaknesses in intercompany reporting.
• Outdated transfer pricing policies.
• Inconsistent internal descriptions of group transactions.
• Unclear responsibility for pricing decisions.
• Data gaps between finance, tax and operational teams.
• Areas where tax risk may need board attention.

A group that can explain and evidence its intercompany dealings is generally in a stronger position with HMRC and with any future buyer or investor.

Compliance matters, but the deeper value comes from clearer documentation, reliable evidence and greater confidence in how the group’s international position is presented.

Stronger documentation should not create unnecessary bureaucracy. The aim is a position that can be explained, not paperwork for its own sake.

Responsibility for the group’s tax position remains with the business and its directors, but a clear process helps management understand the issues that need attention.

Final thought

The International Controlled Transactions Schedule is about more standardised reporting to HMRC on cross-border related party transactions.

For in-scope groups, the sensible response is to understand which transactions may need to be reported, review how those transactions are priced and make sure the supporting records are reliable.

Because the proposal is still subject to consultation and final regulations, businesses should check the latest HMRC guidance and take advice based on their own group structure and transaction profile.

At Accendo, we support businesses with tax and advisory work focused on clear communication, practical recommendations and a well-managed process. For groups with cross-border related party transactions or permanent establishment dealings, an early review of the current transfer pricing position, documentation and reporting data can help identify issues before the ICTS rules take effect.

Accendo supports businesses with corporation tax and advisory work where clear records, practical judgement and well-supported decisions matter.

This article is for general information only and reflects the consultation position at the date of publication. It should not be treated as legal, accounting, tax, transaction, investment or governance advice. You should obtain specific advice based on your organisation’s circumstances