HMRC publishes new guidance for taxpayers setting out its expectations as to how taxpayers should ensure their submissions are 'correct and complete'.
HMRC's recently published Guidelines for Compliance 13 (the 'Guidelines') set out its clear expectations for taxpayers when filing returns or submitting documents that are declared to be correct and complete to the best of the taxpayer's knowledge. This post explores HMRC's views on legal interpretation, uncertain filing positions and the steps taxpayers should take to meet their compliance obligations, as set out in the Guidelines.
Background to the Guidelines
The Guidelines, which apply to both businesses and individuals making submissions in relation to any tax, have been published hot on the heels of HMRC's recent commitment (in its Transformation Roadmap (July 2025)) to reduce "legal interpretation disputes", which it defines as "cases where there is no avoidance, but where the customer's interpretation of the law, and how it applies to the facts of a particular case, result in a different tax outcome than that intended by the legislation". This forms part of HMRC's objective to raise revenue by closing the 'tax gap', which stood at £46.8 billion in 2023/2024. One of the ways it plans to do this is through clearer expectations as set out in its guidance products, including these Guidelines.
Key points in the Guidelines
The key points made by HMRC in the Guidelines (which takes the form of a recommendation and not a legal obligation) are explained below.
- Filing Position: In order to have a "filing position" and to be able to declare a return or document to be correct and complete, the return must be based on facts that are correct and complete and a legal interpretation that the taxpayer believes is, on balance, the most likely to be found correct if the courts were to consider the issue. Just believing that the position taken is arguable is not enough to satisfy this requirement.
- Professional advice: In HMRC's view, steps taken by a taxpayer to ensure that a return is correct should be proportionate to the level of uncertainty, the potential impact on the charge to tax and the complexity of the tax arrangements. A taxpayer should consider what "prudent and reasonable steps" to take in the circumstances, and such steps may be different depending on the resources available to the taxpayer (eg "a larger business may have more access to legal advice than a smaller business").
- Dealing with Uncertainty: If a tax position remains "uncertain" after taking these steps, HMRC's view as to how a taxpayer should deal with this in its filing or document depends on the type of uncertainty.
- If there are "finely balanced" arguments as to the correct legal interpretation to be applied (ie "there is more than one reasonable interpretation, with no clear position most likely to be found correct by the courts and tribunals"), or a "novel" interpretation of the law is adopted (ie "one that a court or tribunal has not considered"), HMRC recommends disclosing any such interpretation alongside a filing. This could be done, for example, in the 'white space' of a corporation tax return or by way of a separate letter. HMRC considers that the information provided should be sufficient for it to understand the interpretation adopted and its impact on the taxpayer's assessment.
- Interaction with the Uncertain Tax Treatment (UTT) legislation: If a taxpayer notifies HMRC of the uncertainty under the UTT legislation, HMRC will treat such a notification as sufficient disclosure for the purposes of the Guidelines. The UTT regime's statutory duty of disclosure is, however, narrower in scope, applying only to corporation tax, income tax (PAYE) and VAT where the tax advantage exceeds a £5m de minimis, and applying only when the taxpayer's position is contrary to HMRC's known position and/or an accounting provision is made to reflect the possibility of an alternative tax treatment. HMRC's new guidance, therefore, is potentially considerably wider than the UTT legislation. It is also worthy of note here that notifications under the UTT regime are currently few and far between; HMRC's recent Notification of Uncertain Tax Treatment policy evaluation report (July 2025) disclosed that fewer than 12 notifications were made in 2024/25, and that this number has declined from previous years. This may help explain, at least in part, HMRC's rationale for publishing this latest guidance, and its aim to garner further information regarding uncertain taxpayer positions through some route other than the UTT regime.
- Improbable Interpretations: As an alternative to a 'finely balanced' or 'novel' position, if a taxpayer considers adopting an "improbable" interpretation of the law – ie an interpretation that, to the best of the taxpayer's knowledge, "it is not likely" that the courts would agree with - HMRC's view is that a taxpayer should not file a return on this basis.
- Record Keeping: Whatever position is adopted, HMRC expects taxpayers to keep records of all relevant information used in arriving at a tax position, including notes of the steps taken to reach a conclusion that a particular tax treatment is correct, up to the relevant statutory time limit.
Ultimately, these Guidelines do not represent a change in HMRC's policy, but they are a timely and clarificatory reminder of its stance and recommendations. As taxpayers seek to navigate the ever-changing and increasingly complex tax landscape, the adoption of filing positions that are not entirely clear cut will not be uncommon. In our experience, taxpayers' approach to making disclosures can vary significantly depending on the amount at stake, the degree of uncertainty and whether there is a desire to reduce enquiry windows. The Guidelines provide an insight into HMRC's expectations in this important area.
Taxpayers aiming to act in accordance with the Guidelines may need to consider their processes around:
- determining the level of uncertainty in respect of positions taken;
- making disclosures; and
- preparation and maintenance of supporting documentation.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
