(July 23, 2015)

On July 22, 2015 the UK Government opened a public consultation on measures intended to improve large business tax compliance. The closing date for comments is set at October 14, 2015.

The consultation document defines the scope the consultation as follows:

“At the 2015 Summer Budget, the Government confirmed its intention to consult on measures intended to improve large business tax compliance. These measures are designed to drive further behavioural change in the large business population, embedding best practice in tax compliance in the population as a whole and equipping HMRC with additional tools to tackle the small number of large businesses which continue to engage in tax avoidance or aggressive tax planning, or resist full and open engagement with HMRC.”

The UK Government is proposing to introduce:

• A legislative requirement for all large businesses to publish their tax strategy, enabling public scrutiny of their approach towards tax planning and tax compliance;

• A voluntary ‘Code of Practice on Taxation for Large Business’, which sets out the behaviours which HMRC expects from its large business customers; and

• A narrowly targeted ‘Special Measures’ regime to tackle the small number of large businesses that persistently undertake aggressive tax planning, or refuse to engage with HMRC in an open and collaborative manner.

The consultation document discusses a.o. the following subjects:

• Introduction

• Background

• The current strategy

• The proposals

• Transparency

• Introduction

• Background

• Distinction from Base Erosion and Profit Shifting and Country-by-Country Reporting

• What do we mean by a ‘tax strategy’?

• Board-level oversight

• Tax strategy format and content

• Publication

• Compliance

• Code of Practice on Taxation for Large Business

• Introduction

• Distinction from the Code of Practice on Taxation for Banks (the Banking Code)

• Content of the Code

• Openness and relationship with HMRC

• Governance

• Tax Planning

• How will HMRC use the Code?

• Special Measures

• Introduction

• Criteria for entry into the ‘Initial Notice Period’

• Significant risk to the Exchequer

• Initial Notice Period

• The special measures regime

• Sanctions for failing to change behaviour

• Safeguards

• Leaving special measures

• Summary of Consultation Questions

• The Consultation Process

• How to respond

• Confidentiality

• Consultation Principles

The following 4 Annexes are attached to the consultation document:

• Annex A – Tax Impact Assessment

• Annex B - Special Measures Process Map

• Annex C – Definitions

• Tax avoidance or ‘aggressive tax planning’

• Effective Tax Rate (ETR)

• Disclosure of Tax Avoidance Schemes (DOTAS)

• General Anti Abuse Rules (GAAR)

• Senior Accounting Officer (SAO)

• Annex D – Draft Code of Practice on Taxation for Large Business

• Large Business Commitments

• Openness and Relationship with HMRC

• Governance

• Tax Planning

• How will HMRC use the Code?

Click here to be forwarded to the consultation document as available on GOV.UK, which will open in a new window.

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