SM03200 | Special Measures: Behaviours: Unresolved tax at risk

Special Measures regime applies only where there are at least two significant tax issues with HMRC. A significant tax issue exists where:

• there is a disagreement (or there is a reasonable likelihood of one) between HMRC and a large business over a UK tax liability of at least £2m

• the issue remains unresolved wholly or partly due to unco-operative behaviour

These issues may be under enquiry or referred to, or end up at, tribunal. At each stage for Special Measures to remain applicable there must be two significant unresolved tax issues, though these need not be the same two issues throughout, when a designated HMRC officer is considering applying the relevant step of the legislation.

For the purposes of UK groups, the significant tax issues will be assessed across the group when considering the entry into the Special Measures regime.

Example – significant unresolved tax issues

HMRC has two enquiries open into a large business and the business has consistently displayed unco-operative behaviour, delaying progress. HMRC and the business disagree on the liability in the two enquiries:

• issue 1: HMRC calculates a liability of £25m, the business calculates £20m

• issue 2: HMRC calculates a liability of £45m, the business calculates £35m

For both issues, the difference exceeds £2 million and remains unresolved due to persistent un-cooperative behaviour and delays. As a result, the condition of having two significant unresolved tax issues is met.

FA2016/SCH19/PT3/PARA35(b)

FA2016/SCH19/PT3/PARA39(1)