25 August 2022 Andrea Marshall, Tax Specialist
HMRC have provided further clarification of how Uncertain Tax Treatment (UTT) will apply to universities and their subsidiaries. Members may recall that UTT could potentially apply where company or group has a turnover of more than £200m and/or balance sheets assets of £2billion, and it has an “uncertain tax treatment” relating to VAT, CT or Employment taxes in excess of £5m. This then needs to be notified to HMRC.
Universities are not included because they are classed as “Public Authorities”, which is defined in the the UTT legislation (paragraph 2(1) (of Sch.15 to FB(No.2)21)) as:
a public authority as defined by the Freedom of Information Act 2000 or a Scottish public authority as defined by the Freedom of Information (Scotland) Act 2002 (asp 13).
HMRC have now confirmed that a 100% owned subsidiary of a public body is also excluded from UTT, as the subsidiary would meet the definition of a public authority in Freedom of Information Act. (A subsidiary can be owned by a number of public bodies and still be excluded from UTT, as long as 100% of its shares are owned by public bodies.) Where a subsidiary is excluded from UTT, its turnover and balance sheet do not count towards the thresholds being exceeded.
In the rare occasion where a subsidiary is not 100% owned by public bodies and it has a turnover in excess of £200m and/or balance sheet assets of more than £2 billion then it would be within UTT. When calculating the thresholds you would also need to take into account the turnover and balance sheet of any subsidiaries that it controlled.
A copy of the email exchange with HMRC can be found here, but in conclusion, the good news is that UTT will have very limited application to the university sector.