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UK vs REFINITIV AND OTHERS (Thomson Reuters): CASE SUMMARY

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UK vs REFINITIV AND OTHERS (Thomson Reuters): CASE SUMMARY

Case Information

  • Court: Court of Appeal (Civil Division)
  • Case No: CA-2023-002584
  • Applicant: Refinitiv Limited and affiliates (including Thomson Reuters Corporation)
  • Defendant: HMRC (His Majesty’s Revenue and Customs)
  • Judgment Date: 15 November 2024
  • Download the FULL JUDGMENT

Judgment Summary

The Court of Appeal’s decision in Refinitiv v HMRC is a defining moment in the intersection of transfer pricing and Diverted Profits Tax (DPT). The case revolved around DPT notices issued to three UK-resident companies within the Thomson Reuters group for the 2018 tax period, totaling over £167 million. The dispute arose from conflicting interpretations of an expired Advance Pricing Agreement (APA) between the companies and HMRC.

At the heart of the case was the APA, concluded in 2013, which governed the pricing of intra-group services for the period 2008–2014. This agreement specified the Transactional Net Margin Method (TNMM) as the applicable transfer pricing methodology, determining remuneration for UK entities using a cost-plus markup. HMRC’s later application of DPT involved recalculating profits for the 2018 period, employing a profit-split method instead. Refinitiv contended that the APA principles should govern these calculations, given their relevance to services provided during the APA’s duration.

The Court of Appeal upheld the Upper Tribunal’s earlier decision, concluding that the APA’s temporal and statutory scope was confined to the periods it explicitly covered. It determined that the APA did not apply to the 2018 period, even though the services at issue had been rendered during its term. The Court emphasized that extending the APA’s principles beyond its defined duration would undermine its purpose and the legislative framework governing APAs. This decision reaffirms the need for multinationals to anticipate and adapt to evolving tax regulations proactively.

The ruling is particularly significant for its insights into the interaction between APAs and newer tax regimes like DPT. It underscores the necessity for precise APA terms and highlights the risks of relying on expired agreements in disputes over later tax periods.

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File Type: pdf
File Size: 205 KB
Categories: United Kingdom
Tags: Advanced Pricing Agreements, ALP, APAs, Arms Length Principle, Diverted Profits Tax, Economic Substance, Tax Compliance, Tax Risk Management, TNMM, Transactional Net Margin Method, Transfer Pricing
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Dimension Transfer Pricing International Taxation South African Tax Law
Jurisdictional audience Global audience, covers all jurisdictions Global audience, covers all jurisdictions South Africa specific, relevant to SADC region
Ideal for TP managers, advisors, in-house tax teams, analysts moving into TP Advisors and managers dealing with cross-border rules, treaties, planning Practitioners working with the SA Income Tax Act, cases, compliance
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Primary tools OECD TP Guidelines, UN Manual, BEPS Actions 8–10, 13, case law OECD and UN Models, MLI, BEPS 1.0 and 2.0, domestic rules, cases Income Tax Act, SARS practice notes, Tax Administration Act, SA cases
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Dimension Conducting a Transfer Pricing Trial Effectively Managing Tax Teams Indirect Taxation Tax Risk Management
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Ideal for In-house tax, TP managers, litigators, advisors preparing for audits, ADR, trial Heads of tax, managers, team leads, controllers, emerging leaders VAT, GST, customs, finance managers, AP, AR, compliance specialists Tax managers, risk officers, controllers, advisors building governance
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5000-word assignment if PG-Cert option elected		 End of module progress assessment

5000-word assignment if PG-Cert option elected		 End of module progress assessment

5000-word assignment if PG-Cert option elected