Tax Talk: Notification of uncertain tax treatment by large businesses

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The extended consultation window has recently closed on the government’s intention to require large businesses to notify HMRC where they have adopted an uncertain tax treatment. It is currently proposed that this will be legislated in Finance Bill 2020-21 and will apply to uncertain tax treatments in returns filed after April 2021.

Which businesses will be required to notify?

The requirement will only apply to those large businesses which fall within the Senior Accounting Officer and Publication of Tax Strategies regimes. Under current legislation this means businesses with either a turnover above £200 million or a balance sheet total over £2 billion.

HMRC has also indicated that the notification measure will apply to partnerships and LLPs that exceed the above thresholds, as well as corporates.

The new rules will apply to all taxes that currently fall within the SAO regime – Corporation Tax, Income Tax, PAYE, VAT, Excise and Customs Duties, Insurance Premium Tax, Stamp Duty Land Tax, Stamp Duty Reserve Tax, Bank Levy and Petroleum Revenue Tax.

Meaning of uncertain tax treatment

An uncertain tax treatment is one where a business believes that HMRC may not agree with its interpretation of the legislation, case law or guidance then a tax treatment is said to be ‘uncertain’.

The objective of the new rules is to identify issues where businesses have adopted a different legal interpretation to HMRC’s view.

The notification requirement draws on the IFRS Interpretations Committee’s IFRIC 23 Uncertainty over Income Tax Treatments, which helps to determine a notification requirement. This requires assessing whether it is probable that a tax authority (including a court) would accept an uncertain tax treatment and looks at the ultimate outcome, and not solely the likelihood of challenge by HMRC. The proposed measures differ in this respect as they require an assessment, not of the ultimate outcome, but also to identify and notify uncertainties that HMRC is likely to challenge.

IFRIC 23 only applies to income taxes, however HMRC intends to use a similar definition to apply to all the taxes in scope of these proposed rules.

Notification process

Notification will be via a single annual process which encompasses all relevant taxes. The essential information to be included will be similar to that which is currently included within the SAO regime, namely a concise description of issues identified, but will also require an indication of the amount of tax relating to the uncertainty.

There is a threshold of £1m, whereby uncertain tax treatments amounting to less than £1 million either individually or combined, will not be notifiable.

Current timing for the certification made under the SAO regime is six or nine months from the end of the accounting period of the company, and the intention is to align the notification with these same annual accounts submission deadlines.


The government has included proposed exceptions, including situations in which disclosure is made under another regime, for example DOTAS or DAC6. A business can opt to disclose an uncertainty which is already the subject of formal discussion with HMRC, such as in the course of an ongoing enquiry into a tax return which specifically covers the tax treatment in question.

In addition, the requirement to disclose can be removed where a business has written confirmation from HMRC that it has sufficient information in advance of the deadline for disclosing an uncertain tax position. Where a business has a Customer Compliance Manager (CCM), they are likely to be the person with whom such an agreement is made. However, HMRC will release details of persons to contact for customers without a CCM.

Written by Tom Golding in our London office.