Legislation contained in Finance Bill 2021/22 (which will become Finance Act 2022) includes a new requirement for large businesses to notify HMRC of uncertain tax treatments. It affects businesses with either, or both of the following:
- UK turnover above £200 million, or
- a UK balance sheet total above £2 billion.
The measure, which will take effect from 1 April 2022, is intended to increase tax revenue by helping to reduce the legal interpretation portion of the tax gap, a significant amount of which is attributed to large businesses. A behavioural impact is anticipated, reflecting an expectation that some businesses will no longer adopt a tax treatment that may be considered ‘uncertain’ because of the need to notify. In addition, notifications are also intended to enable HMRC to become aware of potentially incorrect tax treatments sooner than would otherwise have been the case and facilitate better deployment of resources, earlier conversations and, where appropriate, earlier challenge of the approach a business has taken.
HMRC has been engaging with stakeholder organisations representing large businesses and large agent firms in the legal and accounting sectors. Two iterations of draft guidance explaining how uncertain tax treatment will operate were published for consultation with the final guidance published last week.
HMRC will continue to seek stakeholder input, including to identify and prioritise issues across HMRC’s published tax technical guidance that requires updating to enable businesses to accurately identify when a transaction is uncertain.
HMRC has been contacting potentially affected taxpayers directly to provide a link to the final published version of uncertain tax treatment guidance, and to invite them to attend one of two live webinars being hosted later this week and next week.
In addition, where businesses do not have a nominated customer compliance manager (“CCM”), HMRC will provide them with support through the Mid-sized Business Customer Support Team.
HMRC welcomes attendance at webinars from agents acting on behalf of their clients. Also, if you are an agent acting on behalf of a large business, please forward this invitation to your clients. Register here for the webinar.
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