International Controlled Transactions Schedule (“ICTS”). What is it? What can you do now?

Spring in the UK is only a week away. Together with the welcome addition of a little more sunlight, this also signals that a technical consultation from HMRC should be just around the corner on the ICTS.

What is the International Controlled Transactions Schedule?

  • As part of the broader transfer pricing regime, the ICTS is intended to be a new, annual filing obligation for in-scope multinationals to report and disclose cross-border related party transactions in a standardised format to HMRC.
  • Upcoming consultation will confirm the exact reporting requirements and specific form of the ICTS but, in getting to this stage, HMRC has previously released a “template” example of what to expect here: https://www.gov.uk/government/consultations/transfer-pricing-scope-and-documentation/transfer-pricing-scope-and-documentation#annex-b-icts-draft-template
  • HMRC expect its introduction will be for accounting periods beginning on or after 1 January 2027, with filing requirements expected to follow the same timetable as the corporation tax return

Who will it apply to?

We don’t know exactly. Not yet.

Proposals to date suggest the following entities with material cross-border transactions could be required to report:

  • UK entities within the scope of transfer pricing legislation (Part 4 TIOPA 2010)
  • UK permanent establishments (“PEs”) of non-resident entities
  • UK entities with foreign PEs

Potential exemptions might also be available. These are not yet confirmed but may include:

  • SMEs currently exempt from UK transfer pricing requirements (as defined in section 172, and exempt via section 166).
  • Businesses with an aggregated total value of transactions with qualifying territories below £1 million (and no transactions with non-qualifying territories). Aggregated value, at this stage, is being applied to an individual entity and would include the sum of income and expenses. Subject to upcoming consultation outcomes, income and expenses would not be netted off.
  • UK to UK related party transactions (note that there is a broader transfer pricing exclusion for UK to UK companies currently before Parliament, also including a list of “excluded” companies).
  • Transactions covered by an Advance Pricing Agreement (APA).
  • Dividends receivable that are exempt from tax in accordance with Part 9A CTA 2009.

Why is this being introduced?

The ICTS introduction will broadly align the UK with overseas counterparts. Keen to capitalise on advances in technology, HMRC intend the ICTS will facilitate automated, data-led risk assessment by their compliance teams, prior to the opening of enquiries. Whilst it has been denied that this is an international dealings schedule (“IDS”) – a proposal you might remember that failed to get green lit a few years ago – it’s useful to know that several overseas jurisdictions, including Australia, have well established IDS reporting obligations and processes in place.

What can you do now?

Whilst the details are still to be ironed out, forward planning and proactive steps will help ease the transition. Consider your current processes and record keeping processes:

  • The documentation you have on file – Is it appropriate? Is it current? Is it detailed? Would it be sufficient for an audit?
  • The processes and systems you have in place – How do you track your intercompany transactions? Are individual ledger postings easy to follow and extract for analysis? Are intercompany balances kept up to date in real time?
  • Do you know if transfer pricing exemptions currently apply to you? HMRC also consulted on this in 2025 and, presently, the SME exemption is still available.

Having awareness is a key first step – an additional compliance requirement is coming.

HMRC intends compliance burdens will be proportionate but, even with best intentions, a new compliance obligation will inevitably present challenges.

Early preparation will allow processes to be tested ahead of time, internally, and without the added pressure of a lodgement deadline. If your entity has no documentation in place, now is a great time to consider if it should.

How can CT help?

If you have questions about the impending ICTS introduction, please get in contact with your usual CT contact or the corporate tax team via mail@ct.me.

We have broad experience assisting UK companies with international matters and it’s a great time to start discussions.