International Controlled Transaction Schedule – A further compliance burden

Something that didn’t get much coverage in the recent Budget was the introduction of the International Controlled Transactions Schedule (ICTS) which will affect many UK companies, adding a further compliance burden on already stretched businesses.

What is the ICTS?

The ICTS is a proposed annual filing requirement aimed at enhancing HMRC’s transfer pricing oversight by collecting standardised data on cross-border related-party transactions.

Key details from HMRC and official guidance include:

• Enables automated risk profiling and supports targeted manual reviews
• Applies to transactions within the scope of UK transfer pricing rules, including dealings involving UK-based permanent establishments of non-residents and foreign entities with UK PEs

HMRC is reinforcing its technology infrastructure, investing approximately £6 million to support ICTS submission and analysis.

Scope and who is affected

The ICTS will impact:

• UK resident businesses under transfer pricing legislation
• UK businesses with foreign permanent establishments
• Non-UK businesses with UK permanent establishments
• Advisory firms and legal advisers handling such entities

HMRC has estimated that around 75,000 businesses will fall within scope of this new legislation.

What will the ICTS include?

According to draft templates and illustrative guidance, required information includes the following:

• Categories of controlled transactions including goods, services, royalties, financing, and cost contribution arrangements.
• Details for each transaction type will need to include the counterparty identity, transfer pricing methodology, profit-level indicators, net book values, income and expenses.
• Specific sections on cost contribution arrangements (balancing payments, buy-ins/buy-outs) and intra‑group financing.

A draft ICTS template was made available by HMRC during Spring 2025 consultations which can be found here but we are yet to find out if this is the final confirmed version.

Materiality threshold

Fortunately, smaller transactions may be excluded as currently ICTS filing applies to groups exceeding an aggregate value of relevant cross-border transaction exceeding a £1 million threshold. This threshold is based on feedback from the HMRC consultation.

Timeline and implementation

Legislation is to be introduced via the Finance Bill 2025–26 followed by technical consultation on draft regulations scheduled for Spring 2026. The effective date for the changes is proposed as accounting periods beginning on or after 1 January 2027 with the first filings likely due in 2028 alongside corporation tax returns.

Compliance considerations

Businesses will need to adapt their internal systems to collect and securely submit granular data, and medium and large multinationals, including those previously exempt, must prepare and map cross-border transactions carefully to ensure they meet the new compliance requirements.

What businesses should do now

• Assess current materiality and transfer pricing taxonomy across cross-border dealings.
• Begin mapping internal systems to capture key data: counterparties, methodologies, indicators, asset and expense details.
• Plan for system and compliance enhancements to meet the January 2027 accounting period requirement.

Final Thoughts

The ICTS is a major evolution in UK transfer pricing compliance, introducing transparency, data-driven enforcement, and streamlined risk detection. With its upcoming launch in 2027, businesses should proactively prepare systems, documentation, and data flows to efficiently report controlled transactions to HMRC.

How can we help?

If you would like the discuss the ICTS and how it could affect your business, or have any further enquiries, please get in touch with a member of our International Services team on 01293 227670.