Following an announcement in the Summer Budget 2015 and a public consultation legislation is to be introduced in the Finance Bill 2016 to require large businesses or qualifying groups to publish on the internet a tax strategy in relation to UK tax. According to a policy paper published by the UK on 9 December 2015 the measure will affect the two thousand largest businesses in the UK.
The legislation is to require the businesses to publish a tax strategy covering the following areas:
- The approach to risk management and governance arrangements in relation to UK tax;
- The group’s attitude to tax planning as it affects UK tax
- The level of risk that the group is prepared to accept in relation to UK tax;
- The group approach to dealing with HMRC.
If a company does not publish a tax strategy as required by the legislation or if it publishes incomplete information it may be liable to a financial penalty.
The measure is intended to ensure greater transparency in the approach of businesses to UK tax. Oversight of tax strategies at Board level will ensure that tax strategy is a part of the corporate governance process. The result should be to increase the level of tax compliance by large businesses.
