Delay to Government's New Policy on Uncertain Tax Treatment

Government consultation on policy change regarding uncertain tax treatment delayed until April 2022

While HMRC agreed to defer legislation requiring large businesses to disclose areas of tax uncertainty until April 2022, the government is still committed to their new policy requiring large businesses to notify HMRC where they have adopted an uncertain tax treatment.  They are carrying out consultations to seek views on:

• the definition of uncertain tax treatment
• the threshold for notification
• exclusions from the requirement to notify
• the proposed penalty for non-compliance.

Customs duties were in the initial draft of new measures but omitted from the consultation exercise.

Uncertain Tax Treatment

An Uncertain Tax Treatment is one where there is more than one way to interpret or apply tax legislation in relation to a transaction. This proposal will require businesses to tell HMRC where:

• They have used an interpretation or application, for a transaction, that is contrary to HMRC’s known position, or
• They are dealing with a new or novel type of product, transaction or business structure where there are various ways that it can be treated and HMRC’s position is not known.

Scope of the measure

The requirement will only apply to large businesses. The threshold for what is a large business and, therefore within scope of the notification measure, has not changed from the previous consultation and will continue to be modeled on the: 

• Senior Accounting Officer (SAO) regime (Schedule 46 to Finance Act 2009), and 
• Publication of Tax Strategies (PoTS) regime (Schedule 19 to Finance Act 2016). 

Businesses fall within these regimes if they satisfy either or both of: 

• A turnover above £200 million. 
• A balance sheet total over £2 billion.

Customs Perspective

Whilst the customs position is still unclear, Barbourne Brook envisage that it will be included at some point in the future now that regulation is solely in the hands of the UK.  Customs duties are already included within the scope of Senior Accounting Officer.

We will be keeping a close eye on this going forward and will update clients if there are changes.