Large companies partnerships and LLPs notification of uncertain tax treatments

18 March 2022

From 1 April 2022 large businesses are required to notify HMRC when they have adopted an uncertain tax treatment (UTT) in a tax return.

The UTT rules are intended to encourage large businesses to discuss areas of uncertainty with HMRC before they file their tax returns. Where large businesses already have an open and transparent relationship with HMRC it is unlikely that they will need to make disclosures under this new legislation; however, they will still need to have policies and processes in place to ensure compliance.

The Government first announced its intention to bring in this measure at Spring Budget 2020. Through extensive consultation, the initial proposals have been changed substantially, reducing the number of potential triggers for notification from seven to two in the enacted legislation. 

HMRC released its final UTT guidance in February 2022, following technical consultation. There have been some changes from the consultation draft, including to the guidance on how to determine HMRC’s 'known position'.

During March 2022, HMRC invited relevant taxpayers to attend webinars providing an overview of the requirements and the notification regime, promoting its objective of having earlier engagement with these taxpayers on UTTs.

Who is this aimed at?

The UTT rules apply to corporate groups, partnerships and LLPs with UK turnover of more than £200m and/or a UK balance sheet total of more than £2bn; ie similar criteria to those for the senior accounting officer and UK tax strategy publication regimes. HMRC estimates the relevant population to be around 2,300 large businesses.

What is an uncertain tax treatment?

The UTT legislation applies only to tax treatments relating to corporation tax, income tax (including income tax collected via PAYE) and VAT, and notification is not required if the aggregate value of the tax advantages derived from a particular UTT is less than £5m over a 12 month period.

The two separate triggers that could result in a notification being required are that:

  • a provision has been recognised in the accounts, in accordance with generally accepted accounting practice, to reflect the UTT; and/or
  • the treatment of an amount included in a tax return relies on an interpretation or application of law that differs to the way HMRC is known to interpret or apply that law.

HMRC’s known position should be considered at the time the return is filed and if there is no known position there is no requirement to notify, even if HMRC guidance changes later.

HMRC’s position is taken to be known if it is apparent from HMRC manuals, statements of practice, public notices, other HMRC publications, explanatory or technical notes relating to legislation, or correspondence between the taxpayer and HMRC. HMRC’ s position is regarded as not known if it is set out only in stakeholder forums, or in submissions made during litigation.

It should be noted that the Government is committed to further considering one of the proposed notification triggers that was left out of the current legislation, relating to a substantial possibility that a tribunal or court would find the tax treatment adopted to be materially incorrect, and may include it in a future finance bill.


There is no need to notify HMRC under this legislation where all relevant information has already been disclosed by other means, for example via a non-statutory clearance, another disclosure regime such as the disclosure of tax avoidance schemes (DOTAS) rules, or discussions with the business’s HMRC customer compliance manager (CCM). This exemption is intended to reduce the compliance burden for businesses that are already open and transparent in their dealings with HMRC. However, businesses still need to ensure they have provided HMRC with all information required under the UTT legislation.

UTTs relating to corporation tax that have a net corporation tax effect at group level which is less than the £5m threshold are also exempt from the notification requirement, even if the £5m threshold is exceeded at the level of one or more entities.

Tax administration: notification requirements

Nil notifications are not required, but separate notifications are needed for each in-scope tax and the deadline for notification depends on the tax to which the UTT relates.

  • Where the uncertainty is included in an annual return, such as a corporation tax or partnership income tax return, the notification deadline is the filing date for the relevant return.
  • If the relevant return is a non-annual return, such as a VAT return or PAYE return, the notification deadline is the filing date for the last return for the financial year in question.

Notifications are made from the business’s government gateway account via a digital form and specific information is required, including: details of the nature of the uncertainty, the relevant tax regime and the applicable trigger; a quantification of the tax advantage; and, identifying reference details such as the name of the business and its unique taxpayer reference number (UTR) or VAT registration number.


There are penalties for failures by in-scope businesses to notify HMRC of UTTs, including, subject to an appeals process:

  • for a first failure, a penalty of £5,000;
  • for a second failure in the three financial years following the first and in relation to the same tax, a penalty of £25,000; and
  • for further failures in relation to the same tax in the three financial years following a second failure, a penalty of £50,000.

Why is this important to consider now?

The rules apply for UTTs included in tax returns that are due to be filed on or after 1 April 2022. Therefore, notification obligations may arise in respect of tax treatments applied to transactions that happened prior to that date.

In scope businesses therefore need to urgently consider how the legislation impacts them and develop their tax controls framework to establish appropriate policies and procedures to ensure they can identify relevant details of all notifiable UTTs on a timely basis, whether or not they consider themselves to have an existing open and transparent relationship with HMRC.

They should also develop processes to adequately document decisions that no notification is required where the applicability of a notification trigger is debatable or an exemption is relied on. For example, where a discussion is held with a CCM it is good practice to be clear that the business is intending to rely on the general exemption for prior disclosure and obtain confirmation from the CCM that it applies. However, if there are material changes to a transaction following such discussions, it is essential that these are also disclosed to HMRC to ensure it has all the required information.

For more information, please get in touch with Hannah LloydMark Waddilove, or your usual RSM contact.