The current UTT regime was introduced from 1 April 2022 (Schedule 17 Finance Act 2022) requiring large businesses to notify HMRC where they adopt a tax position that was uncertain. The aim of the regime is to identify interpretation disputes earlier, encourage disclosure and reduce the UK tax gap.
The current regime applies to large businesses (companies and partnerships) that have UK turnover > £200 million or a UK balance sheet total over £2 billion. The taxes currently in scope are corporation tax, VAT and income tax (including PAYE).
A notification is required where a tax advantage from a particular UTT exceeds £5 million for the tax period. A position falls within the UTT regime where either there is recognition of a provision in the business’ accounts for the UTT or that the tax treatment adopted is not consistent with HMRC’s publicly stated position. Where the rules apply, the business must notify HMRC and this notification is generally aligned with the filing deadline of the relevant tax return. Notification is however not required where HMRC is already aware of the uncertainty, or the matter has been disclosed through another statutory regime.
A failure to notify results in fixed penalties from £5,000 to £50,000 depending on the frequency of failures to disclose.
As of 1 January 2026, there have been more than 30 notifications involving potential tax at risk of £1 billion.
Main proposals under the “opportunities to extend uncertain tax treatment” consultation
The objective of the changes included within the consultation document is as follows:
“The aim of the changes is to increase HMRC’s ability to identify, at an earlier stage, instances where businesses have adopted legal interpretations that differ from HMRC’s published view, or where HMRC’s view is not yet known. Earlier visibility of such uncertainties supports timely dialogue and helps ensure that any associated tax risks can be understood and addressed appropriately.”
This aim is addressed by extending the taxpayers within scope to also include individuals and trusts – all are within scope with a legal interpretation notifiable where it creates a tax advantage of more than £5 million.
The taxes covered by the UTT regime are also to be extended to include stamp duty land tax, national insurance contributions, constructions industry scheme, capital gains tax and inheritance tax.
In addition to the current UTT trigger where the uncertainty is either provided for in the business’ accounts or is inconsistent with HMRC’s publicly stated position, HMRC propose to include a further disclosure trigger where there is more than one credible legal interpretation and HMRC’s view is not known (i.e. where HMRC has published no guidance).
Although a business currently is not required to notify if it reasonably believes that HMRC already has the relevant information, under the new proposals, the business must obtain confirmation from HMRC that HMRC is aware of the uncertainty before relying on this exemption.
HMRC is proposing to introduce a single annual date by which all UTT notifications must be submitted and are seeking views what date could be used.
These changes are being made in the light of the recent issue by HMRC guidance of Guideline for Compliance 13 (GfC13). This sets out HMRCs view of what steps a company is expected to take in order to be able to sign off that a return is correct and complete. This guidance sets out that where there are a number of possible interpretations HMRC would expect the tax payer to file on the basis of the approach that, on balance, is most likely to be accepted by the courts.
Next steps
This consultation will run for 12 weeks from 12 March 2026 to 4 June 2026. The Government aim to publish a response in summer 2026 with legislation to be introduced in the next available finance bill and will apply to returns filed after 1 April the following year.
Responses should be sent by 4 June to uncertaintaxtreatmentconsultationresponses@hmrc.gov.uk
Should you require any assistance with regards to the above, please contact Tommy McKnight or your usual CWE contact.