In the case of Lifeplus Europe Ltd v HMRC [2026] UKFTT 797 (TC), the FFT has upheld the appeal against an information notice required as part of a transfer pricing enquiry.
CORPORATION TAX – transfer pricing enquiry – information notice issued pursuant to Schedule 36 to the Finance Act 2008 – cross border transactions between the Appellant and its US based parent company – transfer pricing methodology – ss 147 and 164 of the Taxation (International and Other Provisions) Act 2010 – the applicability of Article 9 of the OECD Model Tax Convention and the OECD Transfer Pricing Guidelines – the “arm’s length” principle and the concept of a “comparability analysis” – the need to identify the “tested party” – request for parent company’s group consolidated financial statements and entity level statements – whether the documents requested were “reasonably required” by HMRC to check the Appellant’s tax position – no – whether the documents were in the “possession” or “power” of the Appellant – no – Appeal allowed
The FTT summarised the position as follows:
“This appeal concerns HMRC’s investigatory powers requiring disclosure of information and documents, in the context of a transfer pricing enquiry. The appeal also concerns the application of relevant transfer pricing principles, methodologies and processes as they relate to certain cross-border transactions between the Appellant (‘Lifeplus Europe Limited’) and Eurark LLC (‘the Parent Company‘) (a company incorporated in Arkansas, USA). Transfer pricing applies to the Appellant’s liability to corporation tax, as a matter of domestic legislation, through Chapter 1, Part 4 of the Taxation (International and Other Provisions) Act 2010 (‘TIOPA‘). …
… The Appellant appeals against an information notice (‘the Information Notice‘) issued by HMRC on 2 October 2023, pursuant to para. 1 of Schedule 36 to the Finance Act 2008 (‘Schedule 36‘). …
… The issues in the appeal are:
(1) Whether the documents … requested in the Information Notice are ‘reasonably required‘ by HMRC to check the Appellant’s tax position (‘the reasonably required test’); and
(2) If so, whether the documents are in the ‘possession‘ or ‘power‘ of the Appellant.
These issues will, in turn, require consideration of the relevant transfer pricing principles as they apply to cross-border transactions.”
Following a lengthy discussion, the FTT concluded that:
“Having considered all of the information before us, we are in agreement with Mr Gordon and Mr Morse’s submissions that:
(1) HMRC have not explained what the ‘rational connection’ is between the selection of the TNMM method rather than the CUP method and the contents of the accounts, in the sense of giving an objectively reasonable explanation of why HMRC should be permitted to have them;
(2) HMRC have not explained why the information they need is not contained in all of the information and documents they have received so far;
(3) the OECD Guidelines clearly set out the detailed process to be followed to select a transfer pricing method; and
(4) the OECD Guidelines specifically state that once a particular ‘one-sided’ method is properly selected, there is generally no reason for the tax authority to ask for the accounts.
We are further satisfied that:
(1) the Appellant does not have a present legal right to access the documents requested in the Information Notice, without the consent of the Parent Company. The Parent Company has declined to volunteer them and is not, in any event, subject to HMRC’s jurisdiction;
(2) there is no standing or continuing practical arrangement between the Appellant and Parent Company whereby the Parent Company has permitted the Appellant access to those Accounts irrespective of the absence of any legally enforceable right for the Appellant to do so. The evidence demonstrates that the Appellant does not have a legally enforceable right to access the accounts;
(3) there is no de facto ‘power’, either in the sense asserted by HMRC, or in the very limited sense recognised by the CPR cases;
(4) there is no jurisdiction for a court or a tribunal to order company directors (individually or collectively) to attempt to get hold of documents not already in their possession or power; and
(5) the actions which HMRC necessarily say the Appellant’s directors must take in order to exercise any such de facto power, are not actions lawfully open to the Appellant’s directors to take in any event. This is because it would compel the Appellant’s directors to act in breach of their statutory duties not to create a conflict of interest as between the Parent Company and the Appellant.
Accordingly, therefore, the appeal is allowed.”
https://caselaw.nationalarchives.gov.uk/ukftt/tc/2026/797
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In Schedule 36 Notices – HMRC Information Requests, tax barrister Keith Gordon encourages full compliance with legitimate requests from HMRC but also recommends that taxpayers should stand up to requests that do not meet the strict statutory criteria. The author reminds professional advisers of the risks of providing more information than the law requires.
