Commons Sense

House of Commons · Public Bill Committee

- Sitting 5

11 January 2022

Proposed by Lucy Frazer Con South East Cambridgeshire

Taxation

Summarised by AI from the official record, so it can contain mistakes.

At a glance

Key points

  • Clause 94 requires large UK businesses to notify HMRC about uncertain tax treatments involving more than 5 million.
  • The notification applies to businesses with turnover over 200 million or balance sheet total exceeding 2 billion.
  • The requirement starts on April 1, 2022, for corporation tax, VAT, income tax, and PAYE returns.

Issue summary

Clause 94 introduces a new requirement for large UK businesses to notify HMRC when they adopt an uncertain tax treatment, aiming to reduce the legal interpretation portion of the £5.8 billion tax gap.

Action requested

The Minister proposes that large businesses with turnover over £200 million or balance sheet total exceeding £2 billion must notify HMRC about uncertainties involving more than £5 million in tax differences for corporation tax, VAT, income tax and PAYE returns starting April 1, 2022. The requirement targets those making provisions for uncertainty or when the treatment is contrary to HMRC's known interpretation, with estimated costs of up to £3 million per year.

Key facts

  • Clause 94 introduces a new notification requirement for large businesses.
  • The legal interpretation tax gap stands at £5.8 billion.
  • Businesses must notify uncertainties involving more than £5 million in tax differences starting April 1, 2022.
  • The requirement targets companies with turnover over £200 million or balance sheet total exceeding £2 billion.
  • Estimated costs for businesses to comply are up to £3 million per year.
  • HMRC will promptly acknowledge notifications and assess risks accordingly.
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