The government intends to have large businesses notify HMRC when uncertain tax treatments have been adopted within a tax return. The consultation is now closed and a summary of the responses has been published.

The consultation on the 'Notification of Uncertain Tax Treatments by Large Businesses' ran from 19 March to 27 August 2020 (extended due to Covid-19). The government aims to improve HMRC’s ability to identify issues where businesses have taken an uncertain tax treatment in a return by requiring notification. It is intended that this requirement will have effect from April 2022.

  • 'Uncertain tax treatment' refers to instances where businesses have adopted a different legal interpretation to the view of HMRC in respect of legislation, case law and guidance.
  • It is not the intention to suggest that HMRC’s interpretation is always correct or that a difference in legal interpretation is avoidance or evasion.
  • The policy objective of this measure is to reduce the legal interpretation portion of the tax gap, currently £4.9bn.
  • The threshold for whether a business (corporate entity, Limited Liability Partnerships (LLPs) or partnership) is large will be modelled on :
    • Senior Accounting Officer (SAO) regime (Schedule 46 to Finance Act 2009), and
    • Publication of Tax Strategies (PoTS) regime (Schedule 19 to Finance Act 2016).
    • A company would fall into the above regimes if it has either or both of:
        • A turnover of over £200 million.
        • A balance sheet total of over £2 billion.
  • Draft legislation and a Tax Information and Impact Note (TIIN) will be published before the primary legislation is introduced in the Finance Bill 2021/2022.

The consultation asked 19 questions on how the regime would operate and the impact on business, summarised as follows:

  • Who is liable to notify.
  • The size of the business that will be required to notify.
  • The tax threshold requiring notification.
  • The method of notification.
  • The level of detail that needs to be notified.
  • The proposed implementation date.

The government held 14 meetings and received 55 written responses. A summary of the responses is as follows:

  • Whilst many agreed with the broad policy objective, some believed it lacked a clear rationale.
  • There was a range of concerns expressed:
    • The definition of 'uncertain tax treatment' was not clear nor objective enough.
    • The proposed scope of taxes covered was too wide.
    • The proposed de-minimis of £1m was too low and would lead to excessive numbers of notifications and a large administrative burden on both businesses and HMRC.
    • Any penalties for failure to notify should fall on the business as a whole and not an individual.
  • It was suggested that existing regimes, such as HMRC's Business Risk Review (BRR+), could be extended instead of creating a further scheme and additional reporting burdens.
  • Many felt that there should be exclusions from the regime, including Transfer Pricing and Banks (already covered by the Banking Code of Practice that prevents actions contrary to the intentions of Parliament).

Based on the responses, the government has issued a second consultation to further understand the issues raised. This consultation will consider:

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

This second consultation will close on 1 June 2021 at 11.45pm. Responses should be sent to This email address is being protected from spambots. You need JavaScript enabled to view it..

Useful guides on this topic

Penalties: Senior Accounting Officers  
The Senior Accounting Officer (SAO) of a large company is required under Schedule 46 FA 2009 to ensure the existence of, and report on, the appropriateness of their tax accounting arrangements. Penalties are charged in the event of failures.

External Links

Consultation: Notification of Uncertain Tax Treatments by Large Businesses

Notification of Uncertain Tax Treatments by Large Businesses: Summary of responses

Second consultation: Notification of Uncertain Tax Treatments by Large Businesses


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