HMRC have issued a Policy Paper on Uncertain Tax Treatment (UTT).
UTT will be relevant to members with:
- turnover of more than £200 million per annum; and/or
- balance sheet total over £2 billion
It will apply to returns due to be filed on or after 1 April 2022. The main points are:
- The details of what an “uncertain tax treatment” is are still to be defined. But the draft legislation lists these triggers:
- Provisions in the accounts to reflect the probability that a different tax treatment
will be applied to the transaction to which the amount relates.
- an interpretation or application of the law that is not in accordance with the way in which it is known that HMRC would interpret or apply the law.
- if a tribunal or court were to consider the tax treatment applied in arriving at the amount, there is a substantial possibility that the treatment would be found to be incorrect in one or more material respects
- A threshold of £5million will apply – below which notification will not be required. (Similar transactions can be aggregated to reach this limit)
- The threshold will apply separately to CT, VAT and Income Tax (either payable via a partnership return or PAYE)
- A £5k penalty will apply for non-notification (this will rise to £25k and £50k for related failures to notify.)
The Policy Paper does say that “Taxpayers will rely on HMRC’s published guidance to determine HMRC’s known position for the purposes of complying with this measure, so it is important guidance is up to date. Guidance is updated regularly and HMRC are confident the majority of their technical guidance is up to date. In recognition of the increased importance of guidance when UTT is implemented, HMRC will look for further opportunities to improve their technical guidance.”
Further information can be found in the Explanatory note that accompanies the draft legislation.
19 August 2021 
Andrea Marshall, Tax Specialist
