GfC13 - A guide to good transfer pricing compliance

While the principles may seem familiar, the emphasis on legal interpretation, proportionality and disclosure marks a subtle but important shift in HMRC’s compliance position.

At its core, GfC13 reinforces a simple but powerful message: taxpayers are responsible for ensuring their filings are correct and complete to the best of their knowledge, regardless of whether they rely on professional advisers. This “best efforts” standard is not merely procedural - it demands a thoughtful, evidence-based approach to both factual accuracy and legal interpretation.

HMRC is clear, filers must adopt the interpretation of law that is most likely to be correct and not simply the one that yields the most favourable outcome. This is particularly relevant in areas like transfer pricing, where legal ambiguity and commercial complexity often intersect.

The guidance provides a framework for navigating legal uncertainty, distinguishing between:

• Resolved uncertainty, where the filer has taken reasonable steps to verify the position
• Unresolved uncertainty, which must be addressed before filing
• Novel interpretations, which require a genuine belief in their correctness and should be disclosed
• Improbable interpretations, which should be avoided if they are unlikely to be upheld by the courts.

This terminology is not just academic, it has practical implications for how advisers structure advice and how taxpayers document their decision-making.

While professional advice remains a cornerstone of good compliance, GfC13 makes it clear that advice is not a shield. Taxpayers must critically assess the advice they receive, ensuring it is:

• Based on full and accurate facts
• Specific to their circumstances
• Reasoned and supported by credible sources

Importantly, the guidance encourages disclosure where uncertainty remains - even if advice has been taken. This aligns with HMRC’s broader strategy of promoting transparency and early engagement.

GfC13 introduces a proportionality lens, the level of care should reflect the complexity and potential tax impact of the issue. Filing a position that is not reasonably believed to be correct may attract penalties, even if it was advised upon. This raises the bar for both taxpayers and advisers, particularly in high-value or high-risk areas.

The guidance also outlines routes for correcting returns, including:

• Statutory amendments (typically within 12 months)
• Voluntary disclosures for underpaid tax
• Specific channels for PAYE, VAT, and P11D corrections

Where corrections are made in light of GfC13, HMRC recommends referencing the guidance, explicitly signalling a proactive compliance stance.

For transfer pricing, GfC13 is another reminder of the importance of:

• Robust documentation, that supports the chosen method and legal interpretation
• Critical engagement with advice, especially where positions are finely balanced
• Disclosure as a risk mitigation tool, particularly in novel or uncertain scenarios

In practice, this means revisiting internal governance around tax filings, ensuring that decision-making is well-evidenced and that uncertainty is not simply parked until challenged.

GfC13 does not introduce wholly new concepts, however it is a more detailed look and explanation of HMRC’s position and thought process. 

It invites taxpayers and advisers to engage more deeply with the legal foundations of their filings, to document their reasoning, and to disclose where appropriate. In doing so, it aligns with HMRC’s evolving compliance strategy: one that favours transparency, accountability and informed judgement.

For complex areas like transfer pricing, this guidance is a reminder that technical accuracy and appropriate documentation must go hand in hand.

If you would like to discuss how any of the above could impact your business, please do get in touch with your usual S&W contact or the contacts listed.