Start with the end in mind

I've decided to set myself a mini-challenge: to post something on LinkedIn every working day. I’ll try it out for a month, and then decide whether sharing insights has given way to verbal diarrhoea. It has been interesting so far, as it requires me to reflect on points regarding the legal implementation of TP that I might take for granted but that others will hopefully find useful.

One such is the practical impact of what we do. Transfer Pricing compliance is not the only function of intercompany agreements (ICAs). But it’s a critical function, and requires a project management approach.

The key is to start with the end in mind. In this case, defence of TP positions in tax audits. Will the agreements support the taxpayer's position, or undermine it?

For any given intercompany transaction, the TP documents will make certain factual statements. Some of those will relate to the delineation of the transaction, including the contractual allocation of risk, or the arrangements regarding IP or other intangible assets.The question is: are those statements in the TP filings true or not? Are they evidenced by the documentation?

This is similar to the verification process for an IPO prospectus. Can you back up the statements you are presenting as fact? Or are they unfounded (reckless) assertions? This evidence needs to be put in place in advance. You can’t cobble together a story after the event. (Well you can, but it’s far more expensive and will be likely to carry little weight.)

If you'd like to hear more of my 'thoughts for the day', I'd be delighted for you to follow me on LinkedIn. I hope to see you there.