Large businesses: notification of uncertain tax treatment

HMRC has published draft guidance on the rules (set out in the draft legislation for Finance Bill 2022) for large businesses to notify HMRC when they take an uncertain tax position.

The provisions will have effect for returns within scope that are due to be filed on or after 1 April 2022. A tax treatment will be uncertain if it meets one of three tests. Broadly, the tests cover where a provision has been made in the business’s accounts under GAAP in respect of an uncertain tax outcome, where the position taken represents a divergence from HMRC’s known position, and where there is a substantial possibility that a tribunal or court would rule against the position taken by the taxpayer.

The draft guidance covers the following topics in detail:

–        scope of the uncertain tax treatment rules;

–        notification criteria;

–        threshold test;

–        notification process;

–        exemptions; and

–        assessing penalties (including reasonable excuse).