How come so little transfer pricing is investigated by H M Revenue & Customs?

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Reuters have reported this morning that:

Her Majesty's Revenue and Customs (HMRC) said the amount of 'tax under consideration' from large businesses, in relation to transfer pricing and thin capitalisation inquiries, was 1 billion pounds at 31 July 2012, up from 680 million at the end of March 2011.

The data was released in response to a Freedom of Information Act request from lawyers Pinsent Masons.

Heather Self, a partner with the firm, said the figures showed HMRC was getting tougher with big companies.

However, a spokesman for the tax authority said there had been no change in approach.

I would be surprised if the increase was coincidence.

The Revenue's response is disappointing. What's wrong with saying HMRC is tackling transfer pricing abuse? It exists, after all and it's exactly what the Public Accounts Committee asked that HMRC do.

What is surprising is that the sum under scrutiny is so small. International trade into and out of the UK amounts to hundreds of billions a year. 60% of that is likely to be subject to transfer pricing. How come so little is looked at? Could it be because H M Revenue & Customs have just 65 transfer pricing specialists? 


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