Notification of uncertain tax treatments for large businesses

The measure

It has been announced that large businesses will be required to notify HMRC if they take a tax position which relies on an uncertain legal interpretation that HMRC are likely to challenge. The policy will draw on international accounting standards which many large businesses already follow, and the government will consult shortly on the detail of the notification process.

The government expects the measure to raise £45m per year by 2023-24.


Who will be affected?

The announcement refers to large businesses, being those with a turnover above £200m per year, or a balance sheet total of more than £2billion. 


When will the measure come into effect?

The requirement will apply from April 2021. 

Our view

This announcement is in keeping with a more general drive for transparency with tax authorities, which is reflected in regulatory requirements and HMRC’s current approach towards large corporate enquiries. Depending on how the new requirement is enacted, there could be a perceived tension with the more trust-based relationship between businesses and HMRC, shown in the customer compliance manager and business risk review regimes.

Very little detail is published at this stage and so taxpayers will need to await the consultation process to understand more about the proposed requirement, which taxes it will apply to, and whether in practice it will involve more disclosure than is already made in statutory accounts, tax filings, and routine discussions with HMRC.