BKM509600 - Interaction of the Code with other measures: notification of uncertain tax treatments by large businesses

FA22/SCH17/PART2 introduced a requirement for large businesses to notify HMRC when they take a tax position in their returns for Corporation Tax, Income Tax (including PAYE) or VAT that is uncertain. The Bank Levy, Banking Surcharge and amounts payable in respect of controlled foreign companies under Part 9A of TIOPA 2010 are specifically excluded from this requirement.

Part 1 of the Code requires the bank to maintain a transparent relationship with HMRC. In part 4 this is expanded to include disclosing fully the significant uncertainties in relation to tax matters (BKM505100). The obligations of a bank that has adopted the full Code therefore include disclosing information required by the Uncertain Tax Treatment legislation (UTT).

Part 4 of the Code also encourages the bank to approach HMRC to discuss any proposed tax planning transactions, where, on the bank’s analysis, the tax result may be contrary to the intentions of Parliament (BKM507100).

If the bank discusses with HMRC an uncertain tax treatment under the Code or makes a Code approach before the deadline for notifying under UTT, and all the required information (UTT15100) has been provided in these discussions, the general exemption within UTT (UTT16200) would apply, and the bank would not need to notify the uncertainty under UTT.

The information disclosed under the Code may not include all the information required under UTT, particularly in the case of a Code approach, in which the bank’s tax analysis of the planning is assumed to be correct (BKM507150). Therefore, it may be the case that notifying under UTT is required, regardless of there having been a prior Code approach.

Part 3 of the Code requires that a bank should not promote arrangements to other parties unless the bank reasonably believes that the tax result of those arrangements for the other parties is not contrary to the intentions of Parliament. Banks may also approach HMRC in such cases. Where there is no uncertainty around the treatment of the transaction for the bank itself, it is unlikely that the UTT notification would be required for the bank in such circumstances.

For further guidance on UTT see the Uncertain Tax Treatments by Large Businesses Manual.