Why I’m a terrible parent (reason #1,062,978)

I won’t try to melt your screen with a picture of our 10-month old daughter, Romy. But this is one of the countless ways I’m failing her as a parent: I haven’t had Romy vaccinated for chickenpox yet.

If you’ve experienced chickenpox as a parent – or if you’ve just seen the relevant oven-gloved episode of ‘Friends’ –  you’ll know the level of physical and emotional discomfort that chickenpox can cause. And the key thing is … it’s eminently avoidable (apparently, the vaccine is around 90% effective).

So why haven’t I arranged for Romy to be vaccinated yet? Just the usual excuses: too busy, too many other things going on, and it requires a certain amount of forward planning. The cost isn’t an issue, and for anyone with a job or in business, the economic case alone for vaccinating (avoiding the loss of work time) is overwhelming, not to mention the humanitarian reasons (avoiding needless suffering for child, parents, siblings, etc.).

I hear you saying, “OK Paul, got the message, but what has this to do with structuring international groups or intercompany agreements for Transfer Pricing compliance?”

Good question! Here’s the thing. A while ago we co-hosted a private discussion group on the Transfer Pricing aspects of Intangibles. And of course, legal documentation, such as intercompany licence agreements, was recognised as a key element of defence against TP challenges. Unless you have that in place, you basically don’t have Transfer Pricing documentation at all, because you have no idea whether the intra-group supplies you are presenting have any legal basis. The consensus of people around the room (mainly tax directors) was that they were waiting for a ‘mini disaster’ in the form of an adverse TP audit, so that they could ask for more resource to deal with this type of compliance properly.

At the time, I was nodding along with everyone else – but in retrospect, that attitude makes no sense at all. None. Nada. Zilch.

Each one of us has a finite budget available when it comes to time and money. It’s up to us to prioritise those budgets as rationally as possible, according to the future we want to create. In our working lives, we’re generally acting as custodians: our job is to manage resources and prioritise actions on behalf of the organisation we represent or advise. This requires creating time and money budgets according to the priorities which are most important for the organisation concerned. If we need third party approval for more resource, it’s up to us to make the case for it if we believe that’s the right thing to do.

So, the idea of just waiting for something to go wrong, before taking action, is as ridiculous as me waiting for chickenpox to break out in the nursery before trying to book my daughter in.

In the area of Transfer Pricing documentation – if there are gaps, the relevant questions to ask yourself should include:

  • Where are the most costly potential risk areas, both in terms of high risk countries and high risk supplies within the group?
  • How should I evaluate those risks, in terms of potential impact, likelihood of exposure and mitigation actions available?
  • How should I assess the relative importance of those risks, alongside other risks that I’m responsible for managing?
  • What action do I need to take now?
If you need to put appropriate intercompany agreements in place, we can help. Just email us at info@lcnlegal.com or call us on +44 20 3286 8868.