International Controlled Transaction Schedule – a further compliance burden in the UK

by Andrew Neuman

A topic that received limited attention in the recent United Kingdom Budget was the introduction of the International Controlled Transactions Schedule (ICTS), which will affect many UK companies and add a compliance burden to already stretched businesses.

What is the ICTS?

The ICTS is a proposed annual filing requirement designed to enhance HM Revenue & Customs (HMRC)’s transfer pricing oversight by collecting standardised data on cross-border related-party transactions.

Key details from HMRC guidance include automated risk profiling and targeted manual reviews. This will apply to transactions within UK transfer pricing rules, including UK permanent establishments (PEs) of non-residents and foreign entities with UK PEs. HMRC is investing approximately GBP 6 million to support ICTS submission and analysis.

Scope and who is affected

The ICTS will impact UK resident businesses within transfer pricing legislation, UK businesses with foreign PEs, non-UK businesses with UK PEs, and advisory firms and legal advisers supporting these entities. HMRC estimates around 75,000 businesses will fall within this scope.

What will the ICTS include?

Draft templates and guidance indicate the ICTS will require categories of controlled transactions, including goods, services, royalties, financing, and cost contribution arrangements. For each category, this includes counterparty details, transfer pricing methods, profit-level indicators, net book values, income and expenses, and specific disclosures for cost contribution arrangements and intra-group financing. A draft ICTS template was published during Spring 2025 consultations, although it is unclear whether this is the final version.

Materiality threshold

Smaller transactions may be excluded, as ICTS filing applies where aggregate relevant cross-border transactions exceed GBP 1 million, following feedback from HMRC’s consultation.

Timeline and implementation

Legislation is expected via the Finance Bill 2025–26, followed by technical consultation in Spring 2026. The proposed changes will apply to accounting periods beginning on or after 01 January 2027, with first filings likely due in 2028 alongside corporation tax returns.

Compliance considerations

Businesses will need to adapt systems to collect and submit more granular data. Medium and large multinational groups, including some previously exempt, will need to map cross-border transactions carefully.

What businesses should do now

Assess materiality and current transfer pricing classifications. Map systems to capture key data, including counterparties, methodologies, indicators, assets and expenses. Plan system and compliance enhancements ahead of the 2027 start date.

Final thoughts

The ICTS represents a significant change in UK transfer pricing compliance, increasing transparency and data-driven enforcement. Businesses should take steps now to prepare systems, documentation, and data flows for reporting to HMRC.

Andrew Neuman is a tax partner with over 20 years' experience advising large corporations, both domestic and overseas, owner-managed businesses, and private individuals on all areas of taxation. Andrew specialises in international tax issues, helping clients to structure activities in a tax-efficient way.