The Eye (Spring)

Definitive Expertise:
Transfer Pricing
Our transfer pricing service has come a long way since the team was
created by Managing Director Ruth Steedman in November 2014. Here,
Ruth explains why our services are so widely sought after.
Before anything
else, please
explain transfer
pricing to us!!
It’s actually a fairly simple
concept describing the pricing
of cross border transactions
between different entities
within the same multinational
group. The fundamental
premise of transfer pricing is
the ‘Arm’s Length Principle’ –
the concept that intercompany
transactions should be priced
as they would be between
independent parties, ie: as
they would be at arm’s length.
So why is it so
important for
companies to
get right?
Quite simply, because the
price at which a company
pays a related party for goods
or services (the transfer
price) impacts the profit of
that company, and therefore
the total tax it pays. While
multinational groups obviously
often seek to minimise that
amount, the role of the various
tax authorities is to ensure
they tax their ‘fair’ share of
profit from the activity of a
group in their jurisdiction.
Thus it matters greatly, since
we are all familiar with the
public outcry when the levels
of tax paid in the UK and
other countries by the likes
of Starbucks and Google are
publicised. It can affect the
reputation of the company,
and hit their bottom line if the
public withdraw their custom.
Tell me about
your team and
what you do
I lead the transfer pricing team
and report into the Head of
our Tax Advisory Practice
Marvin Rust. We currently
comprise eight people and are
an international, multilingual
team with members who have
backgrounds in finance, law
and economics, as well as a
former Revenue inspector.
Our role is to price cross
border transactions within
a multinational group to
determine a ‘fair’ price (or
an arm’s length price) for
the transaction. We have the
expertise to advise on all types
of intercompany transactions,
from benchmarking returns
for routine activities such as
the provision of services and
the resale of products, to the
valuation of licence fees for
access to intangible assets and
the determination of interest
rates for intragroup loans.
We also draft documentation to
evidence to the tax authorities
that the price of intercompany
transactions are fair, and
help companies defend their
intercompany pricing when it is
questioned by tax authorities.
We are the UK member firm
of the WTS network, the
largest alliance of independent
tax advisers outside the
Big Four with a presence in
105 countries. As transfer
pricing should always be
considered from both sides of
an intercompany transaction,
this allows us to bring the
necessary international
perspective to our work.
Why do clients
want to buy
transfer pricing
services from FTI??
Apart from the fact that we
have a great team, we have
two unique selling points
that set us apart from our
main competitors, the large
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