Mutual agreement procedure for double tax disputes

The mutual agreement procedure (MAP) lets a taxpayer ask HMRC, or the other country’s tax authority, to resolve taxation that is not in line with a double tax treaty, most often a transfer pricing adjustment that leaves the same profit taxed twice. UK law requires the case to be presented within 6 years after the end of the chargeable period concerned, unless the treaty allows longer, and most modern treaties allow 3 years from the first notification of the action causing the problem.

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When can you ask for MAP?

MAP is described in Article 25 of the OECD Model Tax Convention, and HMRC says the vast majority of the UK’s almost 130 tax treaties contain a MAP article based on it. A request can be made whenever a person considers that the actions of one or both tax authorities result, or will result, in taxation not in accordance with the treaty (INTM423010 and INTM423020). Common cases are:

a transfer pricing adjustment in one country with no matching reduction in the other;
a dispute over the profit attributed to a permanent establishment;
a disagreement about residence, including dual resident companies under the tie breaker described in dual resident companies;
individuals taxed in both countries on the same employment income, pension or gain.

HMRC’s practice is set out in Statement of Practice 1 (2018), read with the International Manual from INTM423000. HMRC will admit a case even where the issue has already been settled in a UK enquiry, and will admit bona fide adjustments that a taxpayer makes in its own later returns after an audit. It also points out that UK transfer pricing law does not let a business reduce its own UK profits to match a foreign adjustment through its accounts or return; MAP is the only route to that relief (INTM423030). How MAP fits with the rest of a treaty is covered in how double tax treaties work.

Which tax authority do you apply to?

Older treaties require the request to go to the competent authority of the country where the taxpayer is resident. Newer treaties allow it to go to either country. Where an adjustment affects related companies in both countries, HMRC advises each to apply to its own competent authority. On receiving a request, the UK competent authority notifies the other country’s competent authority without exception (INTM423020).

In the UK the competent authority function sits within HMRC’s Business, Assets and International directorate, with separate contacts for transfer pricing and permanent establishment cases, for company residence and withholding tax issues, and for individuals (INTM423110). There is no set form; the case is presented in writing (INTM423040).

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What are the time limits?

Section 125(3) of the Taxation (International and Other Provisions) Act 2010 requires a case to be presented before the end of 6 years following the end of the chargeable period it relates to, or any longer period the treaty specifies. Section 125(2) adds that presenting a case is not a claim for relief, so the ordinary rules on claims in section 42 of the Taxes Management Act 1970 do not apply to it.

Older UK treaties are silent on timing, so the 6 year domestic limit governs. More recent treaties follow Article 25 and allow a case to be presented within 3 years of the first notification of the action giving rise to taxation not in accordance with the treaty. HMRC reads this in the way most favourable to the taxpayer: the 3 years only start on first notification, but a case can be presented earlier. In a UK transfer pricing enquiry, HMRC treats first notification as the point the extra profit is quantified, such as a closure notice or an amendment to the return during the enquiry (INTM423040). The other country may take a different view, so the treaty text always needs checking.

If the facts are not yet clear, a protective request keeps the time limit open. The minimum is the years concerned, a brief description of the action expected to cause the problem, and the names and addresses of the parties with the UK taxpayer’s HMRC office and reference. HMRC may defer discussions until the case is ready, and a protective request does not mean it accepts the case is justified (INTM423050).

Illustration only. A UK company’s overseas subsidiary receives a transfer pricing assessment from its local authority in March 2027 for the year to 31 December 2019. The UK parent wants a corresponding reduction in its UK profits for that year. The 6 year UK limit for that period expired on 31 December 2025, but if the treaty follows the 3 year rule, the case can still be presented until March 2030.

What should the request include?

HMRC’s information list at INTM423130 is detailed. The main items are:

the years concerned and the treaty articles the taxpayer says are being misapplied, with its interpretation;
full names and addresses of the parties, the UK party’s HMRC office and reference, and signed authority if an agent is acting;
UK tax computations for each year, before and after any UK adjustment;
a summary of the facts and an analysis of the issues, with amounts in both currencies and the exchange rates used;
transfer pricing documentation, or a description of it where it is very large;
copies of correspondence and submissions to the other tax authority;
a schedule of domestic and treaty time limits in each country for each year;
whether an objection, appeal or refund claim has been filed in either country, and any settlement already reached;
whether the issue has been considered in an APA or similar ruling, and the taxpayer’s view on how it could be resolved.

The request should be signed by the taxpayer or an authorised person confirming the facts are accurate and complete. A well prepared transfer pricing file makes most of this straightforward.

How does the process run?

MAP is consultation between governments, not litigation. The taxpayer is not a party, though the competent authorities may invite it to provide information or clarification. MAP does not replace or suspend an HMRC enquiry, and making a request does not itself trigger one (INTM423050).

A taxpayer cannot pursue MAP and domestic appeals at the same time. HMRC will generally ask for domestic remedies to be suspended, or will delay MAP until they are exhausted; where the case has already been decided by a UK court or tribunal, HMRC will still take it up under MAP (INTM423050). Appeals are covered in statutory review and the tax tribunal.

If the UK competent authority accepts that the treaty has not been followed, it first considers granting relief alone where the answer is clear cut; most cases need bilateral discussion (INTM423060). The UK does not require tax to be paid before entering MAP. Tax can be postponed through the normal appeal process, but late payment interest still runs, repayment interest is paid on tax later relieved, and a proportionate part of any penalty is repaid if a UK adjustment is reduced (INTM423070).

HMRC’s statistics show 115 transfer pricing and permanent establishment MAP cases resolved in the year to 31 March 2025, taking 24.8 months on average, with 108 new cases admitted.

What if the two authorities cannot agree?

Older treaties oblige the competent authorities only to try to reach agreement (INTM153270). Where a treaty has an arbitration clause, a taxpayer whose case is unresolved 2 years after it was presented can generally ask for the unresolved issues to go to an independent panel. The UK has committed to mandatory binding arbitration through Part VI of the Multilateral Instrument, but the scope varies by treaty because partners have entered reservations. For a decision to bind, the taxpayer must not pursue litigation on the resolved issues and must withdraw suspended litigation within 60 days of being notified (INTM423080).

How is the result put into effect?

The taxpayer is told the outcome in writing and can accept or reject it; if it rejects it, nothing is implemented (INTM423060). Once accepted, section 124(2) TIOPA 2010 requires HMRC to give effect to the agreement despite anything in any enactment, by discharge or repayment of tax, credit, assessment or otherwise (section 124(3)). Consequential claims, such as loss relief that the agreement makes available, can be made within 12 months of notification even if normal claim deadlines have passed (section 124(4)).

What are the common mistakes?

Waiting for a foreign audit to finish before presenting a case, and losing the time limit in one of the countries.
Assuming the foreign authority applies the same time limits or reads first notification as HMRC does.
Agreeing a foreign audit settlement that waives MAP. HMRC still considers such cases, but full relief is much less likely (INTM423030).
Moving cash between group companies to reflect an adjustment before MAP agrees it; HMRC recommends waiting (INTM423090).
Expecting UK relief for a secondary adjustment. Where another country deems a distribution, the UK neither taxes it nor gives relief for tax on it (INTM423090).
Using MAP where an advance pricing agreement for future years would prevent the same dispute recurring.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 24 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.