Publication of tax strategies by large businesses

Produced by Tolley
Publication of tax strategies by large businesses

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

  • Publication of tax strategies by large businesses
  • Definitions
  • Qualifying UK groups
  • Duty to publish a group tax strategy
  • Content of the group tax strategy
  • Level of detail
  • Stated purpose
  • Penalty for failing to provide a group tax strategy
  • Potential interaction with UK CbC reporting
  • UK sub-groups
  • More...

Following a period of consultation during 2015, Finance Act 2016, s 161 and Sch 19, Part 2 introduce a requirement for all qualifying groups, companies, partnerships and permanent establishments to publish a tax strategy in relation to UK taxation. The government hopes that this will facilitate public scrutiny of the relevant business’ approach towards tax planning and tax compliance. This should encourage adherence to best practice and reduce the occurrence of tax avoidance and aggressive tax planning. Penalties may be levied in cases of non-compliance.

Many large groups already publish some sort of statement on tax policy, as part of the annual report for example, which is often motivated by reputation. This new legislation makes it a statutory requirement to do so. A review of existing publications will be necessary to ensure that any amendments are identified and the requirements of Sch 19 are met.

The entities which are required to publish their tax strategies will need to do so for the first time for the financial year starting on or after 15 September 2016, the day FA 2016 received Royal Assent. So, a qualifying UK group with a 31 December year end will need to publish a tax strategy in respect of the year ended 31 December 2017. See below for details of the publication deadlines. Those impacted by the legislation should start to consider which entities will fall within the publication requirements and when.

Definitions

FA 2016, Sch 19, Part 1 contains a list of definitions which are relevant to the publication of tax strategies. These definitions also apply for the legislation governing sanctions for persistently uncooperative large businesses set out in Sch 19, Part 3, details of which can be found in the Sanctions for persistently uncooperative large businesses guidance note. The key terms are set out below:

TermDefinition
Balance sheet totalFor a UK company, UK partnership or UK permanent establishment, this means the total amount of assets in

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