HMRC publishes draft manual guidance for 2027 transaction reporting

HMRC has published nine pages of draft International Manual guidance on the new International Controlled Transactions ScheduleGOV, giving transfer-pricing and compliance teams the operational detail behind the annual cross-border reporting duty that starts with accounting periods beginning on or after 1 January 2027GOV. The pages walk through the legal framework, the Regulations part by part, an initial-period easement, and a glossary, while warning throughout that the guidance is in draft: the International Controlled Transaction Reporting Regulations 2026 were laid on 4 November 2026GOV and come into force on 26 November 2026GOV, the Commissioners' ICTS notice is due the same dayGOV, and detailed guidance on that notice follows by 31 December 2026.

The duty captures specified international controlled transactionsGOV — dealings meeting the transfer-pricing condition in Part 4 of TIOPA 2010 or the permanent-establishment conditionGOV — between a UK-side entity and a non-UK resident personGOV. The UK side means a UK resident company, a non-UK resident company landlord within the corporation-tax charge, or a partnership whose members include a company within the chargeGOV; the permanent-establishment limb covers dealings between permanent establishments and head offices and related-party transactions attributable to a permanent establishment. Only transactions meeting the threshold in the forthcoming notice become reportableGOV, and anything meeting both conditions is reported separately under each. The reporting entity is usually the UK resident company, the non-UK landlord for its property-income transactions, the representative partner, or the relevant permanent-establishment company; Lloyd's managing agents report syndicate transactions and their own non-syndicate dealings.

Several carve-outs are reviewed every accounting period, with no carry-forward: a transaction excepted for only part of a period is reported in full. Out go dormant-company computations, SME-exempt transactions, distributions, syndicate transactions with at least one unconnected member, transactions under an advance pricing agreement under Part 5 of TIOPA 2010 — including a pending application accepted as admissible — but not cost-contribution-arrangement agreements, transactions assessed as low risk under ICAP, charities and their subsidiaries, already-reported transactions, and notice-specified cases.

Deadlines track the underlying tax return — company, partnership or syndicate returns as appropriate — with a short-period easement: periods ending on or before 30 September 2027 file by the later of 30 September 2028 and the notice dateGOV, with amendments by the later of 30 September 2029. Lloyd's runs on the Year of Account, so first submissions cover 2027, comprising underwriting years 2027 to 2029 with profits declared on or after 1 January 2030. Information must match the relevant return — same data points identically stated, no material error or omission — and any loss of accuracy forces an amendment, save where HMRC has already examined the position on enquiry or discovery assessment.

Failure to file, to follow the rounding and aggregation rules, to obey a Commissioners' direction, or to correct known inaccuracy draws £300 per periodGOV, then up to £60 a dayGOV, rising to £1,000 a day if the tribunal agrees after 30 days of defaultGOV; inaccurate information draws up to £3,000 where careless, where the entity ought reasonably to have known, or where deliberateGOV. Partnership failure penalties fall on all relevant partners, inaccuracy penalties only on the submitting partner, and a managing agent's failure multiplies by each corporate member party to the transaction. Reasonable excuse — never mere lack of funds or reliance on another person — remains available, and for periods beginning in 2027 first-submission growing pains carry particular weight, though deliberate non-compliance is still penalised.

Legal basis: Finance Act 2026, section 48; International Controlled Transaction Reporting Regulations 2026; TIOPA 2010 Parts 4 and 5; CTA 2009 sections 5(2) and 18A; Taxes Management Act 1970.