International Controlled Transactions Schedule (ICTS): HMRC launches consultation on 16 June 2026

HMRC has now published a technical consultation on the International Controlled Transactions Schedule (ICTS), a new UK annual transfer pricing reporting requirement which the government intends to apply for accounting periods commencing on or after 1 January 2027 to in scope multinational groups.

The government is seeking views on draft regulations and a draft HMRC notice, which detail the reporting requirement. A draft template illustrating the information that would need to be reported to HMRC (as described in the draft HMRC notice) has also been provided.

This consultation marks the next phase in the UK’s move towards more data-driven transfer pricing compliance and provides a detailed view of how the ICTS regime will operate. This follows the enactment of enabling legislation in Finance Act 2026, which enables HMRC to require in-scope businesses to report specified information on international related party transactions. The deadline to respond to the consultation is 31 July 2026. Saffery will be responding and a copy of our response will be available on our website.

What is the ICTS?

As outlined in our previous article on the ICTS, it will require in-scope companies and partnerships to file a standardised schedule with their annual corporation (income) tax return reporting prescribed information on international related party transactions, consistent with detailed information typically captured in transfer pricing documentation (eg local file data). The ICTS applies to “reporting entities”, including:

• UK resident companies,
• Non-UK resident companies within the charge to UK corporation tax because they deal in or develop UK land, carry on a UK property business or have other UK property income,
• Partnerships with a corporate member within the charge to UK corporation tax, where the other person is a non-UK resident or a partnership with a non-UK resident member, and
• UK permanent establishments of foreign companies, and foreign permanent establishments of UK companies subject to exemption adjustments.

What are the key proposals in the HMRC ICTS consultation?

Based on the draft regulations and accompanying HMRC notice, the ICTS will operate broadly as follows:

• The ICTS will apply where:
  • At least one transaction is with a resident of a non‑qualifying territory, or
  • One or more transactions are with a resident of a qualifying territory and the aggregate total value of the income and expense amounts is at least £1,000,000 for businesses within Country-by-Country Reporting (CbCR) or £100,000 for those who are not,
• Additional thresholds determine the level of detail required within the ICTS. In particular:
  • “Relevant value A” is £1,000,000 for CbCR groups and £100,000 for other businesses, and is broadly applied by reference to the value or profit and loss impact of transactions to determine when more detailed must be provided, and
  • “Relevant value B” is £50,000,000 for CbCR groups and £5,000,000 for other businesses, and is applied by reference to the size of financing arrangements (for example loan balances), to determine when detailed information must be provided for those arrangements,
• All specified information must be reported in GBP, and
• The specified information must be accurate and there are penalties for inaccuracy (see below).

In practice, this is likely to mean that the ICTS is a detailed and potentially resource‑intensive exercise. The level of quantitative information required, particularly in relation to financial transactions and intangibles, means that businesses will need robust transfer pricing documentation, including up‑to‑date local files and clearly supported transfer pricing policies, in order to complete the schedule accurately. In many cases, this is likely to rely on formal transfer pricing analysis, including thin capitalisation and benchmarking work. There is also scope for complexity in applying the aggregation rules, explaining the methodologies adopted and calculating the required metrics, which may increase the risk of error.

Will penalties apply for not complying with the ICTS rules?

Based on the draft regulations:

• A penalty of £300 per accounting period applies for failure to provide the required information,
• Where the failure continues after notification, a daily penalty of up to £60 may apply, which can be increased (with tribunal approval) to up to £1,000 per day, and
• A penalty of up to £3,000 per period may apply where inaccurate information is provided and the business knew (or ought to have known) of the inaccuracy, or discovered (or ought to have discovered) the inaccuracy and failed to correct it.

HMRC has indicated that it intends to apply a soft‑landing approach to penalties in the initial period with further guidance expected before ICTS is implemented.

How will the ICTS change transfer pricing compliance in the UK?

Increased transparency in international transactions

The ICTS will require businesses to present consistent, structured data on international transactions, increasing visibility of transfer pricing outcomes and making it easier to identify gaps in transfer pricing support.

Data-led HMRC risk assessment

HMRC is moving towards a more automated, data-driven approach to transfer pricing risk assessment. In practice, this will enable HMRC to identify areas of potential risk by analysing the scale and type of transactions, and by comparing transfer pricing outcomes and policies across taxpayers to internal ‘norms’.

Impact on transfer pricing governance and systems

The level of detail expected is likely to require changes to systems and processes, particularly where businesses do not currently capture transaction-level data in a consistent format. More broadly, the increased visibility of outcomes may influence how businesses approach transfer pricing governance and documentation.

What should businesses do now to prepare for ICTS?

While the consultation remains ongoing, businesses should continue preparing for implementation in 2027:

• Consider how ICTS data requirements align with existing transfer pricing documentation
• Assess availability and quality of transaction-level data (our advice is to prepare a contemporaneous UK local file for the year running up to implementation at least)
• Review transfer pricing policies and ensure they are reflected correctly in the statutory accounts
• Identify gaps in accounting systems and reporting processes for identifying ICTS data

Early preparation will be key given the expected scale of the reporting requirements and detail expected.

How Saffery can support ICTS readiness and transfer pricing compliance

Our transfer pricing team has a wealth of experience and regularly works together with other Nexia members on multi-territory projects. If you would like to discuss ICTS readiness or transfer pricing documentation, please get in touch with Dawn Ross or Evan Tuck.