Transfer pricing disputes in the United Kingdom

Tax Disputes under Institutional Instability: Theory and Implications

“…Since 1915, when the UK implemented the first regulation in this area, tax jurisdictions have been exploring ways to curb transfer–pricing abuses in order to minimise the consequences. From this exploration, a regulation has emerged that enjoys fairly wide international consensus: the arm's length principle (ALP). The ALP attempts to replicate, ‘ … the working of the open market in cases where goods and services are transferred between associated enterprises … ’ Hence, the ALP requires an MNE to set the price of its internal transactions (transfer pricing) as if they were entered into by independent parties in similar circumstances.…”