HMRC consultation signals major expansion of uncertain tax treatment notification regime

HMRC's consultation on extending the uncertain tax treatment (UTT) notification regime, which closed on 4 June, proposes a significant broadening of scope that draws individuals, trusts and a wider range of taxes into a compliance framework that has long presented challenges for large businesses.

Extending the regime

The consultation, titled "Opportunities to extend uncertain tax treatment", followed an announcement at the Autumn Budget 2025. The government aims to publish its response this summer, with any legislation to be introduced in the next available Finance Bill.

The consultation proposed to expand the notification gateway to include individuals where a legal interpretation results in a tax advantage exceeding £5 million, and to bring all trusts within scope subject to the same threshold. 

A host of additional taxes would be brought within the UTT regime for the first time, extending beyond corporation tax, VAT and income tax to include stamp duty land tax, National Insurance contributions, the Construction Industry Scheme and capital gains tax. Inheritance tax is also under consideration. 

A trigger too far?

Most significantly, a new trigger for notification is proposed, requiring notification where HMRC's position is not known and there is "more than one credible interpretation". The stated purpose is to catch uncertainties not currently notified because there is no HMRC guidance on a new or novel product or process and no provision has been made in the accounts. 

There are echoes here of a trigger proposed during the 2021 consultation, which would have required notification where there was a substantial possibility that a tribunal or court would find the treatment to be incorrect. That trigger was resisted on the basis that it would be too subjective to implement, and did not make it into the final legislation.

In some respects, the proposed new trigger is wider and more subjective than the trigger discarded in 2021, which at least made specific reference to a court or tribunal, making it unlikely to find favour with taxpayers already dealing with a significant compliance burden. 

Separately, the consultation proposes narrowing the existing exemption from notification so that it would apply only where the taxpayer has confirmation from HMRC that they are aware of the uncertainty, meaning that any delay or inconsistency on HMRC's side may itself create uncertainty about whether notification is still required.

Osborne Clarke comment

Taxpayers newly within scope should seek privileged legal advice to understand their obligations and risks, and remain alert to the possibility that HMRC may seek to apply a wider view of the existing triggers, particularly in light of the publication of Guidelines for Compliance 13 in September 2025. 

Large businesses already within scope should consider revising their internal controls and allocating responsibilities in respect of new areas or risks that may fall within the extended regime, and should not overlook the interaction between the UTT regime and the senior accounting officer main duty, as well as HMRC's Business Risk Review Plus, or BRR+, process.

For a full analysis of HMRC's consultation on the UTT notification regime and what the proposals mean for taxpayers, see "Show and tell: the changing face of disclosure in tax litigation", written by Osborne Clarke's Jack Prytherch and Yousuf Chughtai and published in the July edition of Tax Journal.