Sep 1

2026

Intercompany charges between UK and Irish companies: the records SMEs need to keep

Intercompany charges between a UK company and an Irish group company should be supported by clear records showing what was provided, why the charge arose and how the amount was calculated. However, the transfer pricing position for SMEs is more favourable than many businesses assume.

Most qualifying UK SMEs are currently exempt from the UK transfer pricing rules under section 166 TIOPA 2010, subject to specific exceptions. In Ireland, qualifying SMEs remain outside the scope of the Irish transfer pricing rules while section 835EA TCA 1997 continues to apply.

That does not mean intercompany charges can be arbitrary. The companies still need records supporting their accounts, Corporation Tax deductions, VAT treatment and the commercial substance of transactions.

Where the SME exemptions currently sit

The UK government confirmed in November 2025 that both small and medium-sized enterprises would retain the existing SME transfer pricing exemption. HMRC can nevertheless bring specified transactions back into scope in certain circumstances, including through transfer pricing notices and transactions involving non-qualifying territories.

The proposed UK International Controlled Transactions Schedule is currently intended to apply from accounting periods beginning on or after 1 January 2027, subject to the final regulations.

What SME groups should keep

Even where formal transfer pricing documentation is unnecessary, businesses should be able to explain significant connected-company transactions. Keep:

• an intercompany agreement describing management services, staff recharges, royalties or other charges;
• a short note explaining how the charge was calculated;
• invoices, timesheets, contracts or board minutes showing that services were actually provided;
• evidence supporting any allocation of shared group costs;
• a record of when the charging arrangement was last reviewed; and
• bank and ledger records showing how intercompany balances were settled.

These records also help if HMRC begins an enquiry, as explained in our overview of what an HMRC compliance check actually looks at.

Where an intercompany balance instead involves a director or participator personally, separate rules apply. The UK Section 455 rate increased to 35.75% for relevant loans or benefits made from 6 April 2026, as covered in our guide to director loan account rules that changed in April 2026.

Keep the accounting trail connected

Intercompany transactions should reconcile through monthly management accounts and the ledgers of both companies.

Sterling and euro groups also need consistent multi currency accounting rules, including appropriate exchange rates and retranslation of monetary balances.

VAT requires separate consideration. Cross-border management or consultancy services are not automatically outside the scope simply because the companies are connected. The place-of-supply and reverse-charge rules may apply, so review VAT compliance across the UK and Ireland border for each type of charge.

Using accounting software that separately identifies related-party transactions can make reconciliations easier. Our guide to moving to cloud accounting explains the systems side, while SCC’s SME business advisory team can help establish suitable reporting controls.

What changes as the group grows?

SME status is tested with reference to connected and linked enterprises rather than looking only at one subsidiary. A growing group should therefore review its status periodically, particularly before acquisitions or restructurings.

Intercompany balances also become important during an exit or liquidation. Our guide to how solvent liquidation works explains why liabilities and balances need to be resolved before distributions are completed. Where records are disputed or incomplete, SCC’s forensic accounting specialists can reconstruct transactions, while the business recovery and restructuring team can assist where cash-flow pressure is affecting one or more companies.

If your UK and Irish entities have intercompany charges that have not been reviewed recently, speak to SCC Chartered Accountants about the accounting, tax and VAT records that should support them.