Budget 2020: Notification of “uncertain tax treatment” by large businesses as of April 2021

19 March 2020


For those of you that attended our Operation Compliance seminars, you’ll remember Alan’s key-note speech referencing HMRC’s demand to have power and influence over shutting down business models or working practices that they simply do not like. When questioned, they are unable to expand or provide any justification as to why they don’t like it; it is a simple case of “we just don’t like it”.

As stated in the Budget 2020, from April 2021, large businesses will be required to notify HMRC when they have adopted an uncertain tax treatment.

HMRC profess that this is not an attempt to scrutinise those who have an alternative interpretation of the law, while in the same breath state that an example of the requirement to notify would be the adoption of a treatment which is contrary to HMRC’s legal interpretation. This gives the message that HMRC’s interpretation of the law is correct and must be followed.


  • Today, 19 March 2020, Government opened a consultation into this new requirement.
  • It is the latest attempt to help reduce tax losses caused by businesses “adopting tax treatments that do not stand up to legal scrutiny”.
  • HMRC state that this proposal is not intended to suggest that HMRC’s interpretation of the law is always right or that a difference in interpretation qualifies as avoidance or tax evasion.
  • The requirement will only apply to large businesses and this will be modelled on the:
    • Senior Accounting Officer (SAO) regime (Schedule 46 to Finance Act 2009) and
    • Publication of Tax Strategies (PoTS) regime (Schedule 19 to Finance Act 2016)
  • Businesses fall into these regimes if they satisfy either or both of; a turnover above £200 million, a balance sheet total over £2 billion
  • This will cover all businesses handled by HMRC Large Business as well as the larger groups in Mid-Sized Business
  • The notification requirement will be legislated in Finance Bill 2020-21 and apply to uncertain tax treatments in returns filed after April 2021.
  • The consultation sets out the framework for the requirement, including:
    • Who is liable to notify,
    • The size of business that will be required to notify,
    • The tax threshold requiring notification,
    • The method of notification, and
    • The level of detail that needs to be notified.


“Uncertain tax treatment” will be defined in legislation. Examples of uncertain tax treatment could be:

  • Adoption of a tax treatment which is under dispute in the courts.
  • Adoption of a treatment which is contrary to HMRC’s stated view in a VAT Brief or Statement of Practice.
  • Adoption of a treatment where HMRC clearance was requested and was not given


HMRC propose the following penalties, similar to those under the SAO regime:

  • A penalty of £5,000 where a company fails to notify the SAO details to HMRC by the end of the allowed period (unless there is a reasonable excuse).
  • A penalty of £5,000 charged on the SAO where the SAO fails to comply with their main duty to take reasonable steps to ensure that the company establishes and maintains appropriate tax accounting arrangements in a financial year.
  • A penalty of £5,000 charged on the SAO where the SAO fails to provide a certificate to HMRC for a financial year within the required timescale or provides a timely certificate that contains a careless or deliberate inaccuracy.

All penalties will be appealable with the opportunity to provide a reasonable excuse.