Uncertain Tax Treatment: discretion of penalties
02 May 2023
HM Revenue and Customs has updated pages relating to Uncertain tax Treatment (UTT) in the HMRC internal manual. The pages, under UTT17000, lay out the provisions for applying penalties and where discretion can be given by HMRC on a ‘case-by-case basis’.
The penalties can be applied where a company or partnership fails to give notice in the following ways:
- not notifying within the time specified
- not submitting a notification when one is required
- submitting an incomplete or inaccurate notification.
However, HMRC recognises that there are situations where discretion must be used. Three examples are given where this can be applied and a choice to charge no penalty is assessed:
- where HMRC has declined to provide clearance on the basis that there is no uncertainty
- where HMRC had not updated guidance to reflect HMRC’s interpretation of the law
- where there is a doubt over whether general exemption is met.
The UTT regulations cover uncertain treatment of PAYE taxes, and so large businesses should be aware of these rules to ensure they don’t fall foul of HMRC scrutiny in future.
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