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ICTS reporting is coming, and businesses with international transactions should prepare now to manage compliance risks.
07 September 2026
The International Controlled Transactions Schedule (ICTS) is expected to introduce a significant new annual reporting requirement for businesses with cross-border related-party transactions or dealings with overseas permanent establishments (PE’s).
With the rules expected to apply for accounting periods beginning on or after 1 January 2027, affected businesses should start assessing their data, systems and transfer pricing processes now. ICTS is expected to be an annual filing to accompanying the corporation tax return.
The ICTS is a proposed standardised schedule that will accompany the relevant UK corporation tax return. HMRC intends to use this data for automated risk assessment and to identify cases that may warrant further enquiry.
Based on the draft rules, the requirement is expected to apply broadly to:
This makes the ICTS wider than conventional intercompany transaction reporting, as it covers both legal transactions and notional PE dealings. It is expected to apply annually, on an entity-by-entity basis.
The draft rules include thresholds and exclusions intended to remove lower-risk businesses from the filing requirement. No ICTS should be required for:
Other businesses may also have no filing obligation if every individual transaction category falls below the relevant materiality threshold, leaving no reportable transactions.
Where a filing is required, the entity will report its specified international controlled transactions. These include cross-border related-party transactions and PE dealings, grouped into defined categories and tested against materiality thresholds.
Under the current proposals, only aggregated categories exceeding £1 million for groups within Country-by-Country Reporting (CbCR), or £100,000 for other entities, would be reportable. Categories below these levels would be excluded.
The draft rules contain both filing thresholds and transaction-category materiality thresholds (as above). The precise operation of these tests should be monitored as the legislation and HMRC guidance are finalised.
The draft rules also distinguish between qualifying and non-qualifying territories, which may affect whether a reporting obligation arises.
Certain items are expected to be excluded altogether, including transactions covered by an in-force advance pricing agreement (APA), UK-to-UK transactions and exempt dividends.
Although the detailed legislation has not yet been finalised, businesses should not wait until the first filing deadline to prepare. Practical steps include:
In our experience, many groups are not compliant with the UK transfer pricing regulations (and by implication) risk being non-compliant in the other countries in which they operate. The proposed ICTS regulations represent a substantial increase in the risk of those groups being investigated by HMRC with possibility of tax adjustments and potentially penalties.
Bishop Fleming can help you assess whether your business is likely to be affected, review your transfer pricing documentation and identify any data or process gaps ahead of implementation. We can also undertake a wider tax risk and governance review.
If you would like to discuss how the proposed ICTS rules could apply to your organisation, please contact a member of our tax team.
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