Risk Assessment

 Before a company prepares Transfer Pricing documentation they should
do a Risk Assessment and decide what companies have transactions
with another related company and will this have a Transfer Pricing impact.

In preparing the risk assessment you should

•  identify any sales, services, licence fees, management charges
  and interest bearing transactions
•  you will need to plan ahead for what resources you have
  available and at what cost to capture the information.

Once the risk assessment has been completed you should decide on
how much information you need to include in your final manual.
Generally the higher the risk the inter company transactions the more
detailed documentation will be required.

Whatever the risk it is necessary to have some form of documentation for
the HMCE should they request the information.  A penalty will be charged
for not having any form of documentation.  Additional penalties will be
charged for negligent or deliberate omissions or mistakes.