Non-statutory clearances

By Tolley

The following Corporation Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Non-statutory clearances
  • Drafting the clearance application
  • Appeals against clearances

Where there is material uncertainty about a transaction, and the issue is commercially significant, taxpayers can apply to HMRC for its view on the tax consequences. This process is available either before or after a specified transaction. The clearance can cover all business taxes and is in addition to the various statutory clearances available to the taxpayer.

In order for clearances to be binding, HMRC must have been provided with all the relevant facts and all the relevant issues should have been highlighted in the application. HMRC request that this requirement is to be interpreted broadly and that anything at all which could potentially be relevant should be disclosed.

HMRC aims to provide clearances within 28 days on:

  • areas of material uncertainty arising within four Finance Acts of the introduction of any new legislation
  • legislation older than last four Finance Acts where there is material uncertainty around the tax outcome of a real issue of commercial significance to the business itself, determined by reference to the scale of the business and the impact of the issue upon it

This service is only available in certain circumstances. If there is, for example, a statutory clearance available, that must be used in preference. HMRC lists in its guidance  certain situations where it will not provide clearance at all. For instance, if HMRC does not feel there is any genuine area of uncertainty, it will not provide clearance. Unsurprisingly, HMRC will also refuse clearance applications for tax planning advice or for approval of transactions that it considers to be for tax avoidance purposes.

Drafting the clearance application

HMRC publish a checklist for use when making an application for non-statutory clearance which is a good guide as to what information they expect (see the Checklist for non-statut

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