On December 9, 2015 the UK HM Revenue & Customs (HMRC) published the following two policy papers with respect to large businesses:

·        Tax administration: large businesses transparency strategy

·        Tax administration: large business special measures regime

Tax administration: large businesses transparency strategy

This policy paper regards legislation that will introduce a requirement for all large businesses to publish an annual tax strategy, in so far as it relate to UK activities, approved by the business’s executive board.

The policy paper provides the following general description of the measure: 

“The measure will introduce a legislative requirement for all large businesses to publish an annual tax strategy, in so far as it relates to UK activities, approved by the Business’s Executive Board.

The strategy will cover 4 areas: 

·        the approach of the UK group to risk management and governance arrangements in relation to UK taxation

·        the attitude of the group towards tax planning (so far as affecting UK taxation)

·        the level of risk in relation to UK taxation that the group is prepared to accept

·        the approach of the group towards its dealings with HM Revenue and Customs (HMRC)

Non-publication of an identifiable tax strategy or incomplete content based on the 4 areas outlined above could lead to a financial penalty. This penalty will be subject to the usual HMRC appeals process.”

According to the policy paper the measure will have effect on and after the date of Royal Assent to Finance Bill 2016.

Click here to be forwarded to the webpage on GOV.UK where one can find links to the policy paper as well as to the Draft legislation and Draft explanatory notes.

Tax administration: large business special measures regime

According to the policy paper this special measures regime applies to just a very small number of large businesses who persistently engage in aggressive tax planning and/or who refuse to engage with the HMRC n an open and collaborative way.

The policy paper provides the following general description of the measure: 

“The government is legislating to provide that large businesses with an ongoing history of aggressive tax planning and/or refusing to engage with HMRC may be subject to special measures.

A business in this position will be advised that they may be of risk of being put into special measures. A twelve month improvement period will then allow HMRC and the business to work together to resolve issues. At the end of the period, the business will either have improved and so not enter special measures or be notified of entry into special measures. At this stage no sanctions are triggered.

Businesses who enter special measures risk sanctions if they demonstrate further instances of the behaviours that led to their inclusions in special measures. Sanctions could include, removing access to non-statutory clearances, removing the defence of ‘reasonable care’ or potentially naming as being in special measures. Businesses enter special measures for a minimum of 2 years. Two years from entry into special measuresHMRC will conduct an ‘exit review’ to decide whether the behaviours have improved and the business should exit special measures or whether an extension of special measures is required.”

According to the policy paper the measure will have effect on and after the date of Royal Assent to Finance Bill 2016.

Click here to be forwarded to the webpage on GOV.UK where one can find links to the policy paper as well as to the Draft legislation and Draft explanatory notes.

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