The UK's Transfer Pricing rules set out how the pricing of transactions between connected parties is dealt with for tax purposes and are based on the internationally recognised 'arm's length principle'. In 2006, the speed of resolution of Transfer Pricing issues was identified as a major concern for HMRC's large business customers.

In 2008, the Department initiated a new approach to Transfer Pricing enquiries involving greater specialisation and team work, a focus on issues of higher risk, action plans for enquiries agreed where possible with companies, and active monitoring of progress.

Since 2008, HMRC has made significant progress in settling enquiries. Then, it took an average of 38 months, with the average age of open enquiries 32 months. As at March 31, 2011 90% of cases open as at April 1, 2008 had been settled. At the end of September, 2011, the average age of open enquiries had fallen to 21.3 months, with 50% open less than 12.4 months. The average age of settled enquiries is now 24.4 months. In the three months to June 30, 2011, HMRC resources were focussed on settling existing enquiries and while this helped to drive down the age of settled enquiries fewer new enquiries were opened in the period leading to an increase in the average age of open enquiries.

At the mid year point the yield for 2011/12 had already significantly exceeded the total yield for 2010/11. That year, HMRC received GBP436m in revenue, with GBP273m provided by the large business service and GBP163 through local compliance. This was, however, down on previous years. In 2008/09, HMRC raked in GBP1,595m, and, in 2009/10, receipts were worth GBP1,039m.

The statistics relating to Advance Pricing Agreements (APAs) also show some improvement. HMRC says that significant progress was made in settling some very old cases during 2010/11, but that this led to an increase in the average time to reach settlement. Nonetheless, at the same time, the reduced median age of settlements reflects the progress made in resolving cases. 49 applications were made in 49, compared to 32 the previous year. 35 APAs were agreed in 2010/11, with 69 applications on hand at year end. The average time to reach agreement rose from 20.3 months to 22.7 months. In 2010/11, 50% of agreements were made within 14 months, compared with 16.5 months the previous year.

Advance Thin Capitalisation Agreement (ATCAs) statistics show that 127 agreements were made last year, with 173 applications on hand at the end of March, 2011. 231 agreements were in force during 2010/11. It took HMRC an average of 9.8 months to reach an agreement, with 50% of agreements reached within 6.9 months. 40 Mutual Agreement Procedure (MAP) cases were resolved in 2010/11, as compared with 45 the previous year. 39 cases were admitted, as against the 51 resolved in 2009/10. HMRC had 92 cases on hand at the end of March, 2011. It took HMRC an average of 27 months to resolve cases, with 50% resolved within 19 months. HMRC says that, as with APAs, the majority of cases require negotiation with other tax administrations, which can impact the time taken to reach agreement.