INTM489240 | The Unassessed Transfer Pricing Profits Process: Behavioural Penalties

UTPP will apply to accounting periods beginning on or after 1 January 2026. For earlier accounting periods please use the diverted profits tax guidance at INTM489500

The UTPP rules will only apply where there has been an inaccuracy in a company tax return which has resulted in an understatement of the company’s liability to tax, or a false or inflated statement of a loss.

Behavioural penalties will apply under FA07/Sch 24 in the same way as for any other inaccuracy in a tax return. For more information on behavioural penalties see CH80000.

For behavioural penalty purposes, the potential lost revenue will depend upon the outcome of the UTPP assessment, for example:

• if the UTPP charge remains at the end of the assessment, then the amount of potential lost revenue will be the additional amount of corporation tax due at the UTPP rate

• if the company amends its tax return such that the unassessed transfer pricing profits are brought into account on its tax return at the normal corporation tax rate, then the potential lost revenue will be the additional amount of corporation tax due at that normal rate