Uncertain tax treatment: When nobody knows the right answer, should you still have to notify?

I was sitting in the department’s Technical Meeting when the subject of HMRC's latest consultation on the Uncertain Tax Treatment (UTT) regime came up and grabbed my attention.

This consultation contains a genuinely striking proposal: taxpayers should be required to notify HMRC of legal interpretation uncertainties even where HMRC itself has no published view on the matter.  Read that again.  You would need to tell HMRC you might be wrong, in circumstances where nobody, including HMRC, actually knows what "right" looks like.  How is that going to work in practice?

UTT was built for large companies and partnerships.  Now HMRC wants to bring individuals and trusts into scope and without any turnover or balance sheet threshold.  The only gateway would be a £5 million tax advantage. That would be a big change.  HMRC points to a £2.1 billion tax gap for wealthy individuals in 2023 to 2024, over half of it driven by legal interpretation issues.  The message is clear: if your tax planning involves interpretive positions of this magnitude, HMRC wants to hear about them, whether you are a multinational or a family trust.

The IHT problem

The consultation proposes adding SDLT, NICs, CGT and IHT to the regime. Most of those are relatively straightforward extensions, but IHT is where things get genuinely awkward.  This is interesting because IHT planning decisions are typically made years, sometimes decades, before the tax crystallises on death.  HMRC acknowledges this timing mismatch and is asking whether UTT could sensibly bite at a point other than death.  That is a hard question, and the consultation does not pretend to have the answer.  For anyone advising on lifetime planning involving trusts or potentially exempt transfers, this proposal needs careful thought.

The two existing triggers, contradicting HMRC's known view, or making an accounting provision, are at least reasonably objective.  The proposed third trigger is different.  It asks: is there more than one credible interpretation, and is HMRC's view unknown?  That is inherently subjective. HMRC tried and abandoned a similar trigger during the original UTT development because it was considered too vague.  The new formulation is arguably better, but advisers will still face real difficulty in judging when a notification is required.  Transfer pricing is excluded, but the boundary between genuine uncertainty and routine professional judgement remains blurry.

There are other notable proposals, including a requirement to obtain written confirmation from HMRC that they are aware of an uncertainty before you can claim an exemption from notification and a possible move to a single annual UTT notification date to simplify timing across taxes, but the headline point is this: HMRC is building a disclosure regime that reaches well beyond its original corporate target, into the world of private wealth, trusts, and personal tax planning.  The consultation closes on 4 June 2026 and legislation is intended for the next Finance Bill.  If you advise individuals or trustees on high-value tax positions, now is the time to engage.