HMRC has launched a technical consultation seeking views on revised draft guidance on the new requirement of Finance Bill 2021/22 which requires large businesses to notify HMRC of ‘uncertain tax treatments’ (UTT) in respect of relevant taxes, subject to a threshold test and specific exemptions.
The initial draft technical guidance was published in August 2021 but was then withdrawn on Autumn Budget day. This has now been updated to reflect the latest version of the proposed legislation, as included in FB 2021 – most notably the removal of a previously proposed ‘trigger’ which would have meant that the rules potentially applied to a treatment if there was a ‘substantial possibility’ it would be found by the courts to be incorrect.
The revised draft guidance includes:
examples to show that when a company is a member of a group, its UK turnover and UK balance sheet totals should be aggregated with other 51% subsidiaries for the purposes of determining whether the large business is within scope;
information on taxes in scope, i.e. what corporation tax does not include for the purposes of the UTT rules with examples;
exclusions from the scope of the UTT rules; and
details of notification responsibility.
In a client briefing, EY notes that: ‘There is some further commentary regarding the application of “trigger 2” (which applies where a treatment is contrary to the “known position” of HMRC), including a number of additional examples. It appears that the list of types of documents which are or are not regarded as reflecting HMRC’s “known position” on a matter is not exhaustive. In the absence of an exhaustive list of documents that establish HMRC’s “known” position, it remains the case that businesses may find it difficult to apply this trigger with certainty.’
EY adds: ‘The updated guidance also provides some additional commentary on the “general exemption” from the rules, which applies to a treatment if HMRC already has available to it all, or substantially all, of the information which would otherwise need to be included in a notification. The guidance now provides some further details on the practical steps businesses will need take to ensure that this exemptions applies, and some limited additional information on the process that businesses without a CCM can follow to access this exemption.’
‘From a VAT perspective, the guidance clearly states that, in quantifying a ‘tax advantage’ in relation to VAT, netting off of input and output tax is not permitted,’ EY also notes.
For the consultation, see bit.ly/354Yc45. Comments are invited by 1 February. The government intends to finalise the guidance by 28 February.
HMRC has launched a technical consultation seeking views on revised draft guidance on the new requirement of Finance Bill 2021/22 which requires large businesses to notify HMRC of ‘uncertain tax treatments’ (UTT) in respect of relevant taxes, subject to a threshold test and specific exemptions.
The initial draft technical guidance was published in August 2021 but was then withdrawn on Autumn Budget day. This has now been updated to reflect the latest version of the proposed legislation, as included in FB 2021 – most notably the removal of a previously proposed ‘trigger’ which would have meant that the rules potentially applied to a treatment if there was a ‘substantial possibility’ it would be found by the courts to be incorrect.
The revised draft guidance includes:
examples to show that when a company is a member of a group, its UK turnover and UK balance sheet totals should be aggregated with other 51% subsidiaries for the purposes of determining whether the large business is within scope;
information on taxes in scope, i.e. what corporation tax does not include for the purposes of the UTT rules with examples;
exclusions from the scope of the UTT rules; and
details of notification responsibility.
In a client briefing, EY notes that: ‘There is some further commentary regarding the application of “trigger 2” (which applies where a treatment is contrary to the “known position” of HMRC), including a number of additional examples. It appears that the list of types of documents which are or are not regarded as reflecting HMRC’s “known position” on a matter is not exhaustive. In the absence of an exhaustive list of documents that establish HMRC’s “known” position, it remains the case that businesses may find it difficult to apply this trigger with certainty.’
EY adds: ‘The updated guidance also provides some additional commentary on the “general exemption” from the rules, which applies to a treatment if HMRC already has available to it all, or substantially all, of the information which would otherwise need to be included in a notification. The guidance now provides some further details on the practical steps businesses will need take to ensure that this exemptions applies, and some limited additional information on the process that businesses without a CCM can follow to access this exemption.’
‘From a VAT perspective, the guidance clearly states that, in quantifying a ‘tax advantage’ in relation to VAT, netting off of input and output tax is not permitted,’ EY also notes.
For the consultation, see bit.ly/354Yc45. Comments are invited by 1 February. The government intends to finalise the guidance by 28 February.
