There are exemptions in the transfer pricing legislation to mitigate the compliance burden and other adverse consequences for many of the taxpayers who would otherwise be affected by applying the transfer pricing regime to connected party transactions.
The mitigation takes the form of:
- Ìý
•ÌýÌýÌýÌý exemptions for small and medium sized enterprises and dormant companies (see below)1
- Ìý
•ÌýÌýÌýÌý modification of the basic rule where allowances are restricted for certain oil-related expenditure (see D7.918)2
It should be remembered that many other countries have transfer pricing rules. Therefore cross-border transactions that are exempt in the UK may still be subject to transfer pricing principles overseas.
Exemptions for small and medium sized enterprises (SMEs)
The UK legislation uses the EU recommended definition of small and medium-sized (subject to certain modifications, see below) and as the EU definition has been incorporated into the UK legislation that defines what is an SME, it continues to apply after the end of the Brexit implementation period3.
The EU definition4 imposes two
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Web page updated on 17 Mar 2025 17:40