Executive summary

On 16 June 2026, the United Kingdom (UK) tax authority, His Majesty's Revenue and Customs (HMRC), published a consultation on the details of the previously enacted requirement to submit an International Controlled Transaction Schedule (ICTS).

Who needs to submit the ICTS?

Submitting the ICTS is mandatory for businesses within the scope of the UK transfer pricing (TP) rules and failure to submit or inaccuracies in submissions are likely to attract penalties and HMRC TP enquiries.

When are the first financial periods covered by the ICTS requirement?

The first covered periods are the ones starting 1 January 2027 and onward, though early preparation is advisable given that the level of required detail is quite high.

What type of data needs to be disclosed?

The ICTS requires in-scope taxpayers to report rigorous quantitative and qualitative detail to HMRC on UK businesses' related-party transactions. Key data points include accounting income and expense for each transaction type, TP methods applied and profit levels earned, explanations of TP adjustments and cost base contents.

What can businesses do to prepare?

Businesses can benefit from readiness assessments and risk-based reviews of their draft ICTS ahead of the deadline. Early identification of issues can help with improving readiness for HMRC TP enquiries.

Detailed requirements

The ICTS is a new compliance requirement introduced for UK taxpayers in Finance Act 2026.

After some initial taxpayer feedback on the previously published ICTS template, HMRC has now published a consultation that requests taxpayers' views on an updated ICTS template and draft regulations governing its submission. The consultation closes on 31 July 2026, and its outcome will feed into a statutory instrument to finalize the detailed rules taking effect for periods starting 1 January 2027 and onward.

HMRC invites opinions on both the detailed disclosure requirements and possibilities for a simplified approach in certain situations. New examples of a simplified approach, in comparison to the previous draft ICTS, include aggregating similar transactions and focusing on the top 10 non-financing or top five financing transactions. However, most of the data-oriented areas of the ICTS template have remained unchanged including the requirement to show accounting income and expense for all transactions and the expectation that it will align to the TP method and profit levels applied.

Overall, the level of detail that the updated draft ICTS requires taxpayers to disclose remains high, exceeding the level required in similar TP forms in some of the other major economies of the world. Examples of additional disclosure required by the new template relate to granular detail on valuations and cost base for service transactions.

The consultation also firms up the materiality thresholds per transaction type, which might not necessarily be considered high. For most transactions, those thresholds would be £1m for taxpayers liable to submit a return under country-by-country reporting (CbCR) and £100,000 for those that are not. These thresholds apply per transaction type, after aggregation of similar transactions, include profit elements and do not allow for any eliminations or netting.

The updated ICTS template in the consultation also enhances the list of qualitative statements required from taxpayers, including elaborating on the cost base of their service arrangements and confirming whether business restructurings have taken place.

The consultation explicitly refers to TP documentation, corporate tax returns and CbCR as disclosures related to the ICTS. Businesses should consider how their ICTS data points align to those items. HMRC also states its intention to invest £6m in technology to be used in reviewing the ICTS submissions at scale for the purpose of quicker identification and probing of TP issues.

Fixed penalties mentioned by the consultation are up to £3,000 for inaccuracies in the ICTS and £300 for late submission plus £60 per additional day of delay. Nonetheless, the amount of these penalties would likely be negligible compared to the impact of an HMRC enquiry that may result from a late or inaccurate submission of the ICTS.

What this means for businesses

Though the option to aggregate certain disclosures and the implementation of fixed thresholds are good news, the ICTS remains focused on details of businesses' transfer prices, such as specific income and expense booked, profit levels earned and TP methods applied. This means that apart from merely stating the intended TP policies, taxpayers would need to evidence their correct application.

Businesses that want to be confident in producing the ICTS data points on time and to the required standard may wish to prepare a dry run of the ICTS using data from periods preceding the 1 January 2027 application date. Businesses can seek to leverage and optimize existing data-gathering processes in their Tax Departments to make this as efficient as possible.

Risk-based reviews prior to submission could also be beneficial, enabling businesses to address any risk areas likely to be challenged by HMRC.