DLA Piper responds to key consultations affecting MNEs published as part of the UK Spring Statement and UK Spring Tax Update 2025

At this year's Spring Statement and Spring Tax Update, the UK government published consultations on:

Reform of the UK's transfer pricing, permanent establishment and diverted profits tax rules here: This consultation included draft legislation for the reform of the UK law in relation to transfer pricing – specifically around the participation condition, UK to UK transfer pricing, the interaction of the rules with the intangible fixed assets code, interpretation in accordance with OECD principles and financial transfer pricing – the definition of permanent establishment and the creation of a new corporation tax charge for unassessed transfer pricing profits in place of the diverted profits tax.

Our response was broadly supportive of the government's policy objective of improving coherence, simplifying the legislative framework and aligning with international standards. We have however highlighted areas where the tax authority's proposals or its draft legislation should be modified to ensure that the reforms are workable and proportionate. We have also highlighted key areas where examples and guidance would be particularly beneficial.

Transfer pricing – amending the scope for SMEs and introducing a controlled transactions schedule here: This consultation had two core proposals: amendments to the exemption for small and medium-sized enterprises and the introduction of an international controlled transactions schedule (ICTS).

In our consultation response, we strongly support the continuation of the transfer pricing exemption for small enterprises but express reservations about the broader proposal to extend transfer pricing obligations to medium-sized businesses; a policy objective to target activity perceived as high-risk could be achieved by a more nuanced, risk-based approach. The consultation says that the proposed ICTS is intended to be part of a targeted and risk-based approach by the tax authority and to that end we have suggested ways in which the design and implementation of the ICTS could be more proportionate, aligned with international standards and less burdensome in terms of compliance.

Advance tax certainty for major projects here: This consultation set out proposals for the government to provide earlier and more comprehensive certainty on the UK tax treatment of significant projects. The government's proposal would essentially involve a broadened non-statutory clearance process to provide bespoke, transaction-specific rulings for major projects, beyond existing statutory routes. A taxpayer would not need to demonstrate 'material uncertainty', for a project to be eligible.

DLA Piper sees this initiative as a positive step to encourage inward investment into the UK by providing global investors with greater confidence in the UK's tax environment. A bespoke clearance service would also bring the UK into line with other countries and thereby increase the UK's attractiveness as an investment destination. In our response, we suggested ways to fulfil some overarching principles that would ensure that the new service achieves its goal. These include: having a timely, well-resourced and expert-led service; allowing for certainty across all relevant taxes and not just corporation tax; setting the eligibility scope so that it captures projects of strategic regional importance or innovative high-growth ventures even if they fall below a very high monetary threshold; ensuring that the process adapts to the needs of each project and its timelines; and the importance of clear communication, early engagement and binding outcomes.

Improving HMRC’s approach to dispute resolution here: Part of the government's ongoing Tax Administration Framework Review, the proposals in this consultation comprise three main parts: digital appeal routes, aligning certain aspects of direct and indirect tax disputes and the effectiveness of alternative dispute resolution (ADR).

In our response to the consultation, we emphasised the need for digital appeal routes to be clearly and comprehensively explained so that taxpayers can evaluate their options on a more informed basis. We set out the aspects of the direct and indirect tax dispute processes that we believe could be beneficially aligned and those that we believe it would be best not to align. We also outlined constraints to the current ADR process and ways in which increased uptake could be encouraged.

If you would like to discuss any of our responses to these consultations and our future engagement with the UK tax authority on these topics, please reach out to your usual DLA Piper tax contact or one of the contacts below: