UTT12100 - Scope: turnover and balance sheet

The legislation sets out the criteria that must be met for Uncertain Tax Treatment (UTT) to apply. This is as follows (paragraph 2):

(2) A company is a “qualifying company” in any financial year if, in the previous financial year, the company had either or both of the following -

(a) relevant UK turnover of more than £200 million.

(b) a relevant UK balance sheet total of more than £2 billion.

There are specific rules defining the relevant UK turnover and UK balance sheet amount when the company is in a group. The definition of a group for UTT is discussed in UTT12200.

For a company that is not a member of a group at the end of the previous financial year, sub-paragraph 3 states:

(a) “relevant UK turnover” means the company’s UK turnover, and

(b) “relevant UK balance sheet total” means the company’s UK balance sheet total.

However, if the company was a member of a group at the end of the previous financial year then UK turnover and balance sheet total are widened:

(4) If the company was a member of a group at the end of the previous financial year—

(a) “relevant UK turnover” means the aggregate UK turnover of the company (“C”) and any other company that was—

(i) a member of the same group as C at the end of C’s previous financial year, and

(ii) within the charge to corporation tax on income at any time during C’s previous financial year, and

(b) “relevant UK balance sheet total” means the aggregate UK balance sheet totals of C and any such other company.

If the financial year of a company that was a member of the same group as the qualifying company does not end on the same date, the figures to include for that company should be drawn from the last financial year that ended before the end of the qualifying company’s financial year.

(6) The Treasury may set regulations that a company of a specific description is not a qualifying company for the purposes of UTT.

“Turnover” is considered as its usual definition under the Companies Act 2006 Part 15. “UK turnover” in the legislation for UTT (in paragraph 7(2)) is defined as:

(a) in relation to a UK resident company, all its turnover.

(b) in relation to a non-UK resident company, so much of its turnover as, on a just and reasonable apportionment, is attributable to the activities in respect of which the company is within the charge to corporation tax on income.

(c) in relation to a UK resident partnership, all its turnover.

(d) in relation to a non-UK resident partnership, so much of its turnover as, on a just and reasonable apportionment, is attributable to any permanent establishment that it has in the United Kingdom.

“Balance sheet total” in relation to a company or partnership and a financial year is the aggregate of assets shown in the balance sheet at the end of the financial year. “UK balance sheet total” is (in paragraph 7(4)):

(a) in relation to a UK resident company, its balance sheet total.

(b) in relation to a non-UK resident company, so much of its balance sheet total as, on a just and reasonable apportionment, is attributable to the activities in respect of which the company is within the charge to corporation tax on income.

(c) in relation to a UK resident partnership, its balance sheet total.

(d) in relation to a non-UK resident partnership, so much of its balance sheet total as, on a just and reasonable apportionment, is attributable to any permanent establishment that it has in the United Kingdom.