Extending the Notification of Uncertain Tax Treatment regime

The Notification of Uncertain Tax Treatment regime (NUTT) was introduced in 2022, with the aim of reducing the legal interpretation portion of the tax gap. It requires large businesses to disclose some areas of uncertainty to HMRC at an early stage. We take a look at a consultation which sets out proposals to extend the regime.

Current requirement to notify

Currently, the regime applies to large businesses. These are companies and partnerships with either, or both, a turnover above £200 million and a balance sheet over £2 billion.

These large businesses must notify HMRC where there is a tax advantage exceeding £5 million and either or both of the following conditions apply:

• The business is taking a position that is contrary to HMRC’s known position (either published in guidance or in direct dealings with HMRC).
• The business has made a provision in its accounts to reflect that its interpretation may not be successful if challenged.

 Proposals to expand the NUTT regime 

The government has published a consultation proposing to expand the current regime.  

According to the consultation, as of 1 January 2026 there have been more than 30 notifications, involving an estimated £1 billion of tax. However, HMRC believes that the existing conditions don't capture all the legal interpretation uncertainties it would like to know about. The existing regime also only applies to large businesses and to certain taxes.

The consultation proposes three main changes:

• Bringing individuals and trusts within scope.
• Including additional taxes.
• Introducing an additional trigger (or triggers) to broaden the range of legal interpretation uncertainties that will have to be notified. 

Bringing individual taxpayers and trusts within scope

The total tax gap for wealthy individuals was estimated to be £2.1 billion in 2023/24, with over half attributable to legal interpretation. HMRC notes that these individuals often have complex affairs involving multiple taxes and may use sophisticated tax planning to reduce tax liabilities. According to HMRC both individuals and trusts regularly make legal interpretations that would be considered uncertain.

The consultation proposes to bring individuals and trusts into the NUTT regime. There isn't any intention to introduce equivalents to the turnover and balance sheet thresholds used to identify large businesses within scope. Instead, notification would be required where the tax advantage exceeds £5 million, and one of the conditions is met.

Additional taxes to be covered by notifications

The current regime applies to Corporation Tax, VAT and Income Tax (including PAYE). National Insurance Contributions (NICs) are included, but only for calculating the £5 million tax advantage threshold in relation to income tax uncertainties. There is currently no requirement to notify uncertainties solely involving NICs.

The consultation proposes to extend NUTT to cover:

• Stamp Duty Land Tax
• NICs
• The Construction Industry Scheme
• Capital Gains Tax
• Inheritance Tax

Additional trigger(s)

As outlined above, there are currently two triggers (or conditions) that require notification to HMRC. A third trigger was dropped before implementation, due to concerns that it was too subjective. This trigger would have required notification where there is a substantial possibility that a tribunal or court would have found the treatment to be incorrect in one or more material respects. 

HMRC now wants to be notified of legal uncertainties that are not captured by the two existing triggers. The consultation proposes a new trigger that would require notification where:

• There is more than one credible legal interpretation.
• HMRC’s view is not known.

HMRC recognises that this introduces subjectivity and accepts that it may prompt notifications that are not of direct interest to HMRC. However, it believes that this trigger "could be effective in identifying the kinds of uncertainties the regime is intended to capture."

Process

Under the current regime, the timing of notifications to HMRC is aligned to the timing of the relevant tax returns. Expanding the taxes in scope would therefore mean additional filing deadlines. A single notifiable arrangement, involving several taxes, could require multiple notifications at different times.

To avoid complexity, the consultation proposes to introduce a new single annual date, by which all notifications within the regime must be submitted, regardless of the tax (or taxes) to which the arrangement relates. This would only apply for NUTT and would not change the statutory filing dates. 

Views are invited on what the date could be, including whether:

• Aligning with an existing filing deadline (such as the return deadlines for Income Tax Self Assessment or Corporation Tax) would provide simplicity; or
• A separate fixed annual date would give greater clarity and avoid confusion with existing obligations.

Exemption from notification

There is currently an exemption from notifying "if it is reasonable for the taxpayer to conclude that HMRC already have available to them all, or substantially all, of the information relating to that amount that would have been included in the notification if it had been required to be given."

The consultation proposes tightening this exemption by requiring the taxpayer to have confirmation from HMRC that the uncertainty has been brought to its attention.

 Let us know what you think

We welcome feedback from members on the proposals included in this consultation.

More generally, we respond to tax consultations and calls for evidence and attend meetings with HMRC at which service levels, delays and other issues you raise with us are discussed. We welcome input from members to inform our work; email us to share your insights and feedback.

Contact us