HMRC transfer pricing and DPT statistics for 2024/25

HMRC has published their most recent transfer pricing and Diverted Profits Tax (DPT) statistics for the period 2024 to 2025. The UK's transfer pricing rules and DPT are important elements in a range of measures implemented by the UK to ensure multinationals are subject to tax on the share of their profits from their UK activities.

The statistics make interesting reading and provide valuable insights into HMRC's approaches and priorities to international taxation, which should be carefully considered by any multinational operating in the UK.

HMRC's transfer pricing yield reached a record high in the 2024/25 financial year supported by a sustained upward trend in recent years. We have seen HMRC placing considerable emphasis on transfer pricing compliance and the scrutiny of arm's length pricing of transactions through the publication of Guidelines for Compliance (GfC7) in 2024. In addition, from 1 January 2027, HMRC will introduce the International Controlled Transactions Schedule ("ICTS"), which will enable HMRC to facilitate data-led risk assessment to target its audit activity.

In addition, whilst the DPT as a separate tax will be repealed for periods from January 2026, it will be replaced by a new corporation tax charging provision for unassessed transfer pricing profits (UTPP) largely retaining the essential features of DPT.

HMRC statistics

International issues involving Multinational Enterprises (MNEs) including transfer pricing, diverted profits tax, CFCs and cross-border debt continue to be a clear priority for HMRC, based on the figures they have released about the significant number of ongoing investigations and the resources they are allocating.

• The number of transfer pricing enquiry cases settled in 2024/25 was 143, with an average resolution time of 41.0 months, the highest in the period covered by the statistics since 2019, continuing an upward trend.
• Staffing for international issues at HMRC was 392 full-time equivalents in 2024/25 (down slightly from 395 in 2023/24), reflecting a stable allocation of resources to these issues.

Transfer pricing yield for 2024/25 was £3,387m, a substantial increase from the previous year's £1,786m, and the highest figure in the period since 2019/20.

A key consideration for MNEs seeking to manage the risk of transfer pricing investigations is obtaining certainty upfront through Advance Pricing Agreements (APAs) or Advance Thin Capitalisation Agreements (ATCAs). The number of APA applications made during the year was 20 in 2024/25, a significant decrease from the previous two years (45 applications in both 2022/23 and 2023/24). The number of APAs agreed was 26, with an average time to reach agreement of 43.9 months (just under 4 years). The longer period to agree APAs could be the product of increasingly complex business models and transactional arrangements of MNEs requiring multilateral as well as bilateral agreements, in addition to more in-depth and quality of analysis required by HMRC. These factors require more time and resource from the taxpayer and HMRC to agree the application of the transfer pricing rules to such fact patterns. As a result, this may have contributed to a reduction in the number of APA applications where the time to agree an APA is almost the same as the period of cover sought, leading to taxpayers considering alternative approaches to obtain tax certainty.

• The number of Advance Thin Capitalisation Agreements (ATCAs) fell to 2 in 2024/25, continuing the downward trend following the introduction of corporate interest restriction rules in April 2017.

HMRC also reported figures on Mutual Agreement Procedure (MAP) cases relating to transfer pricing and permanent establishment issues. The number of MAP cases resolved in 2024/25 was 115, up from 86 in 2023/24, with the average time to resolve a case at 24.8 months. The UK continues to outperform the global average for resolving transfer pricing MAP cases (25.8 months vs. 30.9 months globally in 2024 based on OECD statistics).

• The UK resolved 91% of all transfer pricing MAP cases in the year by agreeing full double taxation relief or eliminating double taxation, exceeding the global average.

Profit Diversion Compliance Facility (PDCF) and Diverted Profits Tax (DPT)

• The Profit Diversion Compliance Facility (PDCF) saw 9 letters issued and 4 new registrations in 2024/25, with 17 cases resolved. The average time to resolve a PDCF case since the start of the programme is 23 months, and 98% of final proposals have been accepted by HMRC.
• About three quarters of large businesses targeted with PDCF letters opted to use the facility, while most of those who did not register were investigated by HMRC.
• DPT net amount collected in 2024/25 was £94m, down from £108m in 2023/24. There were 6 DPT preliminary notices and 6 charging notices issued in 2024/25 (to fewer than 5 customer groups).
• £1,792m of additional tax, primarily corporation tax from transfer pricing settled investigations into diverted profits was collected in 2024/25, the highest in a single year since 2019/20.
• From April 2015 to March 2025, HMRC has secured more than £10.5bn through DPT and related investigations, including over 250 investigations settled for additional corporation tax and business restructuring resulting in additional VAT.

HMRC's report continues to stress the importance of their pursuit of changing MNEs' behaviours and that challenging arrangements that do not allocate the right amount of profits (the arm's length amount) to the UK is generating significant additional tax revenue. As of March 2025, HMRC is carrying out about 53 reviews into multinationals with arrangements to divert profits, with the total amount of tax under consideration in these cases at £3.5bn.

Comments - key takeaway

We anticipate that HMRC will maintain a strong focus on transfer pricing compliance, especially as HMRC plans to recruit additional compliance officers in the coming years and leverage the data acquired through the ICTS process. The use of technology remains a central theme, both for taxpayers seeking to automate their transfer pricing compliance procedures and for HMRC as it enhances its targeted transfer pricing review and enquiry processes. HMRC's risk-based approach to enquiries is evident with the significant increase in transfer pricing yield whilst maintaining the number of staff resources during 2024/25.

In this increasingly complex environment, multinational enterprises must adopt a proactive and consistent approach to identifying, managing, and addressing areas within their businesses that may be subject to tax scrutiny. It is essential for taxpayers to review their current transfer pricing policies and documentation, particularly in light of recent legislative changes and the latest recommendations outlined in HMRC's updated Guidance for Compliance.

Furthermore, dispute resolution should remain a primary consideration when managing transfer pricing risks throughout the business lifecycle. This is particularly highlighted by the vastly different resolution times on agreeing an APA compared to file and defend and pursue MAP where the latter is taking almost half the number of months with a much greater volume of cases. Although the figures do not take into account the likely complexity of many APA cases compared to MAP, it is certainly important to consider when developing an integrated transfer pricing strategy, designing robust and sustainable policies, and effectively managing audits and potential disputes as they arise.

Summary table of key statistics (2024/25)