New proposals will mean increased compliance burdens for large businesses and a broader range of information sources available to HM Revenue & Customs and the public.


  • The UK Government is proposing to introduce:
  1. a statutory requirement for large businesses to publish an annual UK tax strategy;
  2. a voluntary Code of Practice setting out the expected standard of behaviour from large businesses in relation to their UK tax compliance; and
  3. special monitoring measures to tackle a small number of large businesses which are considered to pose a high UK tax risk to the Exchequer.
  • The proposed reforms would apply to large businesses, namely UK incorporated companies which alone, or together with other UK incorporated companies in the same group, have a turnover of more than GBP200 million and/or a relevant balance sheet total of more than GBP2 billion.

The proposals are currently subject to consultation.

Compulsory UK tax strategy disclosure

Large businesses, whether UK or foreign-owned, whether public or private, would be required to publish a yearly strategy covering a number of areas of UK tax compliance, including an overview of their governance and risk management, their attitude to tax planning and risk (such as any Effective Tax Rate targets), and their approach to their relationship with HMRC.

A named individual at Executive Board level, usually the CEO or CFO, would be responsible for owning and signing off the tax strategy. It is not yet clear what if any penalties would be imposed for failure either to publish an appropriate strategy or to act consistently with that published strategy.

Voluntary Code of Practice

A Code of Practice would be published setting out the expected standard of behaviour from large businesses in relation to UK tax compliance and cooperation with HMRC. The Code would be voluntary and the names of signatories would not be made public. However, the Government is also considering whether businesses should be required to disclose in their annual UK tax strategy whether or not they have signed up to the Code.

Banks who qualify as large businesses would not be invited to sign up to the Code as they would already fall within the scope of the existing Code of Practice on Taxation for Banks.

Special measures

HMRC would be able to apply special measures to businesses which they consider pose a high risk of revenue loss to the Exchequer. The criteria for selecting a business would centre on their tax compliance record, their historical level of cooperation with HMRC, and the size of the estimated tax at risk.

A selected business would first go through an initial notice period of 12 months, during which it would be required to demonstrate a significant change in behaviour or be subject to special measures. These measures would include publicly naming the business as being subject to the special regime, increased disclosure requirements including a requirement to disclose unprivileged tax advice, and the removal of the defence of reasonable care against a penalty assessment. Once imposed, these measures would apply for a period of at least two years, at the end of which HMRC would conduct an exit review to determine whether they should be lifted or should continue to apply for a further two years.

What does this mean for businesses?

These proposals would increase the level of both public and HMRC scrutiny of the business's UK tax planning, policies and compliance. Careful thought would need to be given not only to the drafting of the tax strategy but also to any particular area of internal risk management and compliance which the business would like to strengthen prior to the entry into force of these new measures, which could be as early as 2016.

At the same time, the proposals could bring advantages for compliant businesses, in terms of positive relations with HMRC.