5 June 2026
OECD – Transfer pricing of intra-group services
On 1 June 2026, the OECD published a public consultation document, Special Considerations for Intra-group Services, on potential revisions to Chapter VII of the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (‘OECD Transfer Pricing Guidelines’) in respect of the transfer pricing of intra-group services. The discussion draft seeks views on updating and modernising existing guidance on applying the arm’s length principle to services, including an annex with more than 20 new examples. Comments are invited by 22 July 2026 and a public meeting is expected to be held at the OECD in Paris in November 2026. For further details, please see our alert.
HMRC manuals: Cash cancelled and net settled share options
HMRC have published a manual page (see BIM44415) setting out their view that, for shares provided under Restricted Stock Unit plans (RSUs) and Long Term Incentive Plans (LTIPs), section 1288 CTA 2009 can apply. Where this is the case, corporation tax deductions previously denied in periods that ended more than 9 months before the option is exercised may become deductible in the period the option is exercised.
HMRC manuals: Anti-avoidance rules for share exchanges and reconstructions
HMRC have added an appendix to their Capital Gains Manual that sets out further guidance on the changes to the anti-avoidance rules for share exchanges and company reconstructions, which were announced at Budget 2025, and took effect on 26 November 2025.
The appendix sets out, inter alia, how HMRC expect the rules to apply to certain preparatory reorganisations, including to prepare a business for entry into certain tax-advantaged regimes such as the Real Estate Investment Trust (REIT) regime, or to ensure that a share sale will qualify for a relief or exemption, such as the Substantial Shareholding Exemption (SSE). HMRC note that the contents of the new appendix will be incorporated into the main manual in due course.
HMRC manuals: Creditability of foreign qualified domestic minimum top-up taxes
HMRC have added a new page (MTT09200) to their Multinational Top-up Tax and Domestic Top-up Tax Manual on the recognition and creditability of foreign qualified domestic minimum top-up taxes (QDMTTs). HMRC state that, in general, they would expect a QDMTT to correspond to corporation tax for the purposes of various UK tax provisions, including unilateral relief and creditable tax of a controlled foreign company. However, whether a particular amount of income is subject to a QDMTT would need to be determined based on the specific facts and circumstances and the relevant legislation. HMRC also confirm that they would expect a QDMTT to be a covered tax for the purposes of a double tax agreement.
HMRC manuals: New Advance Tax Certainty Service manual published
HMRC have published a new manual on the new Advance Tax Certainty Service for major investment projects, which is due to launch on 1 July 2026, and for which expressions of interest are now invited. Draft guidance on the service was issued in December 2025. Broadly, the service will be available for projects with qualifying UK expenditure of at least £1 billion.
First-tier Tribunal: documents were not reasonably required as part of transfer pricing enquiry
The First-tier Tribunal (FTT) has allowed the appeal of Lifeplus Europe Ltd (‘LEL’) against an information notice issued by HMRC in the course of a transfer pricing enquiry. The notice requested the financial statements of LEL’s US parent company. The FTT ultimately concluded that the financial statements were not reasonably required by HMRC nor were they in the LEL’s possession or power.
HMRC had sought the documents to verify LEL’s transfer pricing position, particularly regarding its use of the Transactional Net Margin Method (TNMM). However, the FTT found that HMRC failed to provide a rational explanation of why they were necessary and why the required information was not available in the other documentation they had received, including a transfer pricing report. In its decision, the FTT made reference to a statement in the OECD Transfer Pricing Guidelines that, generally, a tax authority has no reason to request financial data of an overseas group company once a one-sided transfer pricing method has been properly selected. During the course of the enquiry, HMRC also sought to obtain the financial statements from the IRS via the exchange of information article of the UK-US double taxation convention, however their request was declined.
As to whether the documents were in LEL’s possession or power, the FTT concluded that they were not. It highlighted that LEL lacked any enforceable legal right or existing practical arrangement with its parent company to access these confidential documents.
Temporary reduced VAT rate
The Value Added Tax (Reduced Rate) (Hospitality and Tourism) Order 2026 has been made to implement the temporary reduced VAT rate of 5% for supplies of children’s meals, children’s tickets, and family attractions from 25 June 2026 to 1 September 2026, inclusive. The reduced rate does not apply to supplies that are already exempt from VAT. The Order adds two groups to Schedule 7A, VAT Act 1994. Group 17 applies to supplies in the course of catering (not takeaway meals) that are part of a children’s meal, being a meal “which is only held out for sale as a meal for a child”. Group 18 covers children and family (including at least one child) tickets to shows, exhibitions, theatres, concerts, and cinemas; and all tickets to circuses, fairs, amusement parks, adventure parks, soft-play centres, zoos, observation attractions, farm visitor attractions, and nature reserves, and to museums and other similar cultural facilities. The reduced rate does not apply to sporting events or facilities, or an event or facilities for physical education or recreation. The Order includes rules setting out how the reduced rate applies to tickets for multiple admissions, including for admissions outside of the relevant period. (Contact: Andrew Clarke)
EMEA Dbriefs webcasts
As a reminder, the next EMEA Dbriefs webcast will take place on Wednesday 10 June 2026 at 12.00 BST/13.00 CEST. In UK tax update - June, our panel will discuss topical tax developments of relevance to UK businesses in relation to corporate taxes, employment taxes and indirect taxes.