UTT12050 - Scope: overview

Uncertain Tax Treatment (UTT) applies to large businesses and specific taxes. It applies to both companies (wherever incorporated) and partnerships (wherever formed) that meet the threshold criteria.

Companies or partnerships fall into the UTT regime where they satisfy:

  • A UK turnover above £200 million, and/or
  • A UK balance sheet total over £2 billion (UTT12100).

Where 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.

Examples

Example 1

Company A has a UK turnover in the financial year ending 31 December 2023 of £150 million. Company B, a member of the same group as Company A, has a UK turnover in this same financial year of £60 million. For the financial year ending 31 December 2023, the UK turnover of this group totals £210 million - all companies that are members of this group are in scope.

Example 2

Company A has a UK turnover of £300 million in the financial year ending 30 November 2022. Company B’s UK turnover for this financial year is £10 million. For the group, the UK turnover for this financial year is £310 million, which means that the group is in scope and all companies within this group that are liable to UK corporation tax are in scope.

However, had Company A been a 30% subsidiary of the ultimate parent, it would not be in the same group as Company B. Company A is in scope in its own right (as its UK turnover exceeds £200 million) but Company B’s UK turnover is less than £200 million and it is a member of a different 51% group, so all companies in the second group are not in scope (assuming that the turnover of the ultimate parent does not bring the group’s turnover above the £200 million threshold).

Example 3

Abacus GmbH is a company incorporated in Germany which has a permanent establishment in the UK. The turnover attributable to the UK permanent establishment in the financial year ending 31 December 2025 is £63 million (see UTT12100 for guidance on attribution of turnover and balance sheet total). Within the same group as Abacus GmbH, B Ltd (a UK resident company) has UK turnover of £154 million for the financial year. In total the UK turnover for this financial year is £217 million, exceeding the threshold and putting the group within the scope of UTT.

Taxes in Scope

The taxes within scope of the requirement to notify are Corporation Tax, Income Tax (in a PAYE return or payable by individual members of a partnership), and VAT. (see UTT14500 for further guidance on CT, Income Tax, NICs and VAT)

Corporation Tax includes any amount chargeable under section 330(1), 455 or 464A of CTA 2010 as if it were corporation tax.

Where a group is subject to the Corporate Interest Restriction (CIR) rules, any disallowance is allocated to the company tax returns of group companies, and so treatment of amounts within the CIR calculations are in scope for UTT.

For the purposes of UTT, Corporation Tax does not include:

  • the banking surcharge under s269DA, CTA 2010,
  • an amount chargeable in respect of Controlled Foreign Companies under Part 9A TIOPA 2010,
  • the bank levy under Schedule 19 to FA 2011.

The definition of ‘Corporation Tax’ in paragraph 5(2) includes not only pure Corporation Tax, but also amounts that are deemed to be Corporation Tax.

Examples:

  • Tonnage Tax is deemed to be Corporation Tax (under section 82 of, and Schedule 22 to, FA2000) and therefore within the scope of UTT.
  • Section 104A(1) CTA2009 deems research and development expenditure credits (RDEC) to be taxed as trading income, which means that it is liable to Corporation Tax as a part of that trading income. As a result, R&D uncertainties are within the scope of UTT.

Digital Services Tax is not deemed to be Corporation Tax. Consequently, it is not within scope of the new notification requirement.

Income taxes included in any other return are not within scope of the regime (for example, Income Tax collected via the CT61 return for taxes deducted at source, or the ORIP income tax charge, which is collected via Income Tax Self-Assessment).

Apprenticeship Levy is also not in scope as it is neither income tax nor NIC.