Frequently asked questions
Who needs to publish a Tax Strategy?
UK companies, partnerships and groups are required to publish a Tax Strategy, if, in the prior financial year, the entity or group had one of the following:
- turnover in excess of £200 million; or
- a balance sheet total (i.e. gross assets) exceeding £2 billion.
Furthermore, UK companies and groups are also required to publish a Tax Strategy if they are part of a Multinational Enterprise (MNE) group, with global turnover in excess of €750 million.
When does my Tax Strategy need to be published?
If you first meet the conditions in the previous financial year, your Tax Strategy must be published before the end of the current financial year.
For example, if the financial year in which your business first met the qualifying conditions ended on 31 December 2019, your first tax strategy should be published before the end of your financial year starting on 1 January 2020.
Once a strategy has been published for the first time, a new one must be published by the earlier of 15 months from the date on which the strategy was first published, or within the next financial year.
What should I include in my Tax Strategy?
As well as stating the financial year to which it relates, and details of the applicable legislation, your Tax Strategy should include information on:
- how your business manages UK tax risks;
- your business’s attitude to tax planning;
- the level of risk your business is prepared to accept for UK taxation;
- how your business works with HMRC; and
- any other relevant information relating to taxation.
Your Tax Strategy should be approved by the board of directors and, importantly, be in line with the overall strategy and operation of your business.
It does not need to include the amounts of taxes and duties paid, or any information that might be commercially sensitive.
What are the penalties for not publishing a Tax Strategy?
Penalties may be levied if:
- your business met the requirements to publish a Tax Strategy but failed to publish one;
- your business published a Tax Strategy that does not include all relevant information;
- your business does not ensure the Tax Strategy is made available for free for the appropriate period.
Potential penalties include:
- a £7,500 penalty for not publishing a compliant Tax Strategy;
- a second £7,500 penalty if the compliant Tax Strategy has not been published six months after it should have been; and
- another £7,500 penalty for each following month until the compliant Tax Strategy is published.
HMRC should issue a non-statutory warning notice to publish a compliant Tax Strategy within 30 days, during which if a compliant document is published, a penalty will not be levied.