International Controlled Transactions Schedule: HMRC updates expected in late November

The International Controlled Transaction Reporting Regulations 2026 were laid before Parliament on 4 November 2026. The regulations establish the legislative framework for the UK’s new International Controlled Transactions Schedule (ICTS) reporting requirement.

This represents a significant step in the development of the regime and provides greater clarity on how ICTS will operate. The requirements will have important implications for multinational businesses undertaking international transactions with related parties.

What is the International Controlled Transactions Schedule?

ICTS will introduce a reporting requirement for certain international controlled transactions. The regime focuses on Specified International Controlled Transactions (SICTs), which are the transactions falling within the scope of the new reporting framework.

The information submitted through ICTS will give HM Revenue & Customs (HMRC) more detailed transaction-level data. This will support a more systematic and data-driven approach to identifying and assessing potential transfer pricing risks.

As a result, businesses will need to consider more than the preparation and submission of a new return. They will also need to assess whether their data, systems and governance arrangements are ready for greater scrutiny.

When will ICTS apply?

The regulations apply to accounting periods beginning on or after 1 January 2027.

While the first filings will follow the end of the relevant accounting period, the work required to prepare for the regime should not be left until the reporting deadline. Businesses will need to understand which entities and transactions are within scope, identify the relevant data and confirm that this information can be captured accurately throughout the accounting period.

Early preparation will be particularly important for groups that hold transaction data across different entities, jurisdictions and systems.

Which businesses and transactions will be affected?

The proposed thresholds of £100,000 and £1 million will be important in determining which businesses and transactions fall within scope. The applicable threshold will depend on the reporting entity and its wider group circumstances.

Businesses will therefore need a clear understanding of their international related-party transactions and the entities through which those transactions are undertaken. This assessment should cover both the value and nature of the transactions, as well as whether the relevant reporting conditions are met.

The regulations establish the framework for identifying reporting entities and SICTs. The detailed information requirements will be set out through an HMRC notice. Businesses should monitor further guidance and assess how any additional specifications affect their reporting processes.

Accuracy and consistency will be critical

Information submitted under ICTS must be accurate and consistent with the analysis applied in the relevant tax return.

This requirement means businesses will need strong links between their transaction data, transfer pricing documentation, tax return positions and ICTS submission. Differences between these sources could attract questions from HMRC, particularly where the reason for an inconsistency is not clear or documented.

Businesses should consider whether:

• transaction data uses consistent definitions and classifications across systems
• tax return positions align with the underlying transfer pricing analysis
• transfer pricing documentation reflects the transactions reported through ICTS
• adjustments and exceptions are recorded with a clear supporting rationale
• data can be reviewed and reconciled before submission

This exercise may identify weaknesses that extend beyond ICTS, including inconsistent data ownership, manual processes and limited visibility across group entities.

Penalties for non-compliance

The regulations introduce penalties for failures connected with the new reporting requirement. These include failure to provide the required information and the submission of inaccurate information.

Businesses should build appropriate review and approval controls into their reporting process. Clear accountability will be essential, particularly where the required information must be collected from multiple functions, entities or jurisdictions.

Tax, finance, legal and operational teams may all hold information relevant to the submission. Roles should be agreed in advance so that data collection, validation, escalation and final approval are coordinated effectively.

What does ICTS mean for businesses?

ICTS represents a shift towards more granular, data-driven transfer pricing risk assessment by HMRC. The information reported will allow HMRC to examine international related-party transactions more systematically.

The quality, consistency and accessibility of transaction-level data will therefore become increasingly important. Businesses should assess whether their current transfer pricing processes can support the new reporting environment.

These four areas should be prioritised:

1. Data and systems

Businesses should identify where the required transaction data is held and determine whether existing systems can capture it at the necessary level of detail.

This review should consider the completeness and quality of the data, as well as whether information from different systems can be consolidated and reconciled efficiently. Groups should also identify areas that depend on manual extraction or adjustment.

2. Consistency across reporting

Transaction data, tax returns, transfer pricing documentation and ICTS submissions should present a consistent position.

Businesses should establish a reconciliation process that identifies differences before information is submitted. Where differences are appropriate, the reason should be documented and supported.

3. Governance and responsibilities

Responsibility for each stage of the reporting process should be clear.

Groups should establish who will identify in-scope transactions, collect and validate the data, review the transfer pricing analysis and approve the final submission. This may require coordination between central tax teams and local entities.

4. Controls and assurance

Existing transfer pricing controls should be reviewed to determine whether they are suitable for ICTS reporting.

This includes controls over data quality, transaction categorisation, threshold monitoring, reconciliations and final approval. Businesses should also consider how they will retain evidence supporting the information submitted.

Preparing for the new reporting environment

The introduction of ICTS provides an opportunity to strengthen transfer pricing governance and improve the underlying quality of international related-party transaction data. Businesses should avoid treating it solely as another compliance return.

A structured readiness assessment can help groups:

• identify entities and transactions that are likely to be in scope
• map the required data to existing systems and processes
• identify gaps, inconsistencies and manual dependencies
• define ownership across tax, finance and other functions
• design appropriate review and approval controls
• prepare for the detailed requirements in HMRC’s notice

With the regulations now laid before Parliament and implementation applying to accounting periods beginning on or after 1 January 2027, businesses should begin preparing for the operational impact.