TP audit defence file — do I need an adviser, or can I do it alone?
Some of it, yes — and we will say so on the call if that is the honest answer. The parts that are worth paying for are the ones where a missed election, a missed deadline or an unverified threshold costs more than the fee: assembling it before an audit means the response is a document delivery rather than a reconstruction.
What if I have already filed and got it wrong?
That is a common starting point. We re-derive the position, identify whether an amendment or a disclosure route is the right vehicle, and tell you which one preserves the relief that is still available. The order matters more than the speed.
How long will it take?
It depends on the documents rather than on us. Once the pack is complete most filings turn around inside a fortnight; anything that needs a certificate from a tax authority runs on that authority's timetable, which we tell you at the start rather than at the end.
What is a transfer pricing defence file and why do we need one?
The documentation report states the policy. The defence file is the evidence sitting behind it: the emails that show who decided what, the time records behind a service charge, the board minutes that record a restructuring, and the invoices that show money actually moved the way the policy says it should. An auditor is testing whether the conduct matched the written policy, and the report alone cannot answer that. Assembling the file while the people involved are still in the business, and still remember the reasons, is the difference between delivering documents and reconstructing a history from fragments.
Is our documentation report enough if an audit starts?
It is the starting point, not the answer. A report describes a method and a result. An audit asks whether the group behaved that way, and the questions land on conduct: who performed the function, who carried the risk in practice, what the parties did when the forecast turned out wrong. Those answers live in operational records rather than in the report. Where the report and the records disagree, the records win. That is why the defence file is assembled separately and checked against the report rather than summarised from it.
Can we build a defence file after the audit letter arrives?
It can be done, and often is, but it costs more and produces a weaker file. Reconstruction under a deadline means chasing archived mailboxes, staff who have left, and systems that have been replaced, while the clock on the information request runs. It also removes the option of fixing anything: once the audit is open, a gap is a gap. Built in advance, the same work is a filing exercise, and anything missing can still be documented properly while the facts are current.
Why are our margins lower than the rest of the group?
That is the first question an auditor asks, and it is worth answering internally before anyone else does. A difference is not automatically a pricing problem. Start-up losses, an unusual year, a function that sits in one entity and not the others, or a one-off cost can all explain it. What matters is whether the explanation is documented at the time and consistent with the functional analysis. An entity described as a routine distributor that carries genuine market risk will be asked to explain the gap between the description and the outcome.
What records should we keep to support an intercompany charge?
Enough to show the charge was earned, quantified on a stated basis, and actually paid. In practice that means the agreement in force for the period, the underlying cost or time records, the output the recipient received, the invoice, and the payment. For a management or service charge the recipient's benefit is the point of attack, so keep whatever shows the work landed there. Where the charge changed mid-period, keep the decision that changed it. A charge that appears in the accounts with no agreement and no supporting detail is the easiest adjustment an auditor can make.
How does a defence file help us settle a transfer pricing audit?
A settlement position has to be realistic, and realism comes from knowing which parts of the file are strong and which are not. Building the evidence first surfaces the weak points while there is still time to think about them rather than react to them. It also sets the tone of the audit: a group that answers requests promptly and completely is treated differently from one that asks for extensions. You negotiate from what you can prove, so knowing precisely what you can prove is the work that has to happen first.
Is "fund transfer pricing" the same thing as transfer pricing?
No — and if you came here to calculate FTP, this is not it. Fund transfer pricing is a bank's internal allocation of funding costs and benefits between its own business units, a treasury and asset-liability management discipline used to measure branch or product profitability. Tax transfer pricing is about prices between legally separate related parties across borders, and about which country taxes the resulting profit. The words overlap; the fields do not. See our transfer pricing work.
What is an intercompany agreement, and do we need one?
It is the contract between the related parties — who does what, who bears which risk, what is charged and on what basis. It matters because when there is no agreement, an auditor prices the transaction from the conduct they can observe rather than from the arrangement you intended, and conduct rarely tells the whole story. Signed agreements that match the invoices and the actual functions are the cheapest transfer pricing protection there is. See our transfer pricing work.
