HMRC have released guidance to accompany the draft legislation that they released which covers Uncertain Tax Treatment (UTT) for large businesses.

On 20 July 2021 HMRC released draft legislation which they intend to introduce from 1 April 2022 which makes it a requirement for certain business to make declaration of any tax positions that they may have taken which may be controversial.  On 19 August HMRC released guidance to accompany the draft legislation.

The provisions apply to Corporation Tax, Income Tax (when returned in a Partnership or PAYE return) and VAT.

The size of business (including groups) thresholds are based on the Senior Accounting Officer and Publication of Tax Strategies regimes.  Businesses fall into these regimes where they meet one, or more, of the following criteria:

  • A UK turnover of over £200m, and/or;
  • A UK balance sheet total of over £2 billion.

Notification is required if one, or more, of the following conditions are met:

  • A provision is made in the accounts in accordance with generally accepted accounting practice to reflect the probability that a different tax treatment will apply to a transaction.
  • An amount has been arrived at relying on an interpretation or application of the law that is different to HMRC’s known interpretation or application.
  • It is reasonable to anticipate that if a tribunal or court were to consider an amount that has been arrived at, there is a substantial possibility that the treatment adopted would be viewed as incorrect.

No declaration is required unless it is reasonable to conclude that the tax advantage obtained will exceed £5 million in the relevant period for the relevant tax.

Penalties of up to £50,000 can be charged for failing to notify.

Electronic notification will be required from April 2022 and is due on the filing deadline of the relevant return.

Useful guides on this topic 

Notification of uncertain tax treatments by large businesses: consultation responses

External links

Draft legislation

HMRC guidance


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