17 Nov 2020

Uncertain Tax Treatments Notification delayed

Implementation of uncertain tax treatments notification is delayed until April 2022

The Government announced last week that the implementation of the new requirement for large businesses to notify HMRC of uncertain tax treatments will be delayed until April 2022.  The Government stated that the delay was to allow more time to get the policy and legislation right and to allow more time for businesses to prepare.

This decision has been made following the recent consultation on the new proposals when a number of organisations had raised concerns over the scope of the proposals. In particular, we believe that HMRC intends to look carefully at the concerns around subjectivity within their original proposal.

Background to the new proposal

Earlier this year HMRC published a consultation document asking for views on the introduction of a notification requirement in respect of uncertain tax treatments for large businesses (i.e. those which are in scope of the Senior Accounting Officer (‘SAO’) regime). The notification requirement would apply to corporation tax, as well as Petroleum Revenue Tax (‘PRT’), VAT, excise and customs duties, and other taxes which are in scope of the SAO regime.

The notification would be a single annual process, similar to that used by the SAO regime with penalties for failure to notify similar to that existing under the SAO regime.

The proposed threshold for reporting has been set at £1m tax effect in respect of the combined tax outcome of all in scope uncertain tax treatments in place.

Accounting practice 

As readers will be aware IFRIC 23, already requires companies to reflect their assessment of the outcomes of uncertain tax positions in the calculation of current and deferred tax charges. Where a company concludes that it is not probable that the tax treatment adopted in a return will ultimately prove successful (for example that it is probable it would ultimately be overturned by the courts) it must reflect this in its accounts.

HMRC’s current proposal

Unlike IFRIC 23, HMRC’s current proposal does not focus on expected final outcomes. The proposal is more widely drawn than IFRIC 23 as it requires notification of cases where the taxpayer believes that HMRC may in the first instance challenge its view on the operation and interpretation of tax law regardless of whether the taxpayer believes it is probable that any such challenge will ultimately be successful.

CWE Comments

We believe the proposal as currently drafted will lead to considerable uncertainty as to compliance obligations and could also be seen as moving the goalposts unfairly in the direction of HMRC.

We, therefore, welcome the Government’s announcement to delay implementation and further consider the policy and legislation. It is perhaps unlikely that the measure will be abandoned altogether but we hope that HMRC will respond to the concerns raised by either conforming the proposal to existing accounting tests or clarifying the test to make it more objective, for example for the assessment to be made with reference to published HMRC guidance.

Given that it seems likely that this regime will be introduced we believe that it is important that taxpayers factor in the possibility of a wider notification requirement when assessing the efficacy of any tax planning.


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