HMRC’s plans to widen the uncertain tax treatment regime

July 28, 2026

And why valuations are now in the firing line.

Since April 2022, large businesses have had to tell HMRC when they’ve taken a tax position resting on a genuinely uncertain point of law. It’s a niche compliance duty most of the profession barely thinks about day to day. That may not be true for much longer.

On 12 March 2026, HMRC published a consultation proposing to expand the Uncertain Tax Treatment (UTT) regime substantially: more taxes, more taxpayers, and a materially lower bar for what counts as “uncertain.” If it proceeds, valuation-driven tax positions, the kind our clients and yours rely on every day, move from being a matter for defensive documentation to something that may need to be actively flagged to HMRC at the point a valuation is prepared.

Where the regime stands today

The current rules apply only to companies and partnerships with UK turnover above £200 million or a balance sheet above £2 billion. Notification is triggered where the tax advantage exceeds £5 million and either the taxpayer’s position contradicts HMRC’s known view, or the taxpayer has made an accounting provision reflecting the risk of a successful challenge. It covers corporation tax, income tax and VAT. Penalties for missing a notification start at £5,000 and rise to £50,000 for repeat failures.

By HMRC’s own account, take-up has been modest: around 30 notifications since the regime began, against a “legal interpretation” tax gap it now estimates at £5.4 billion. That gap is the justification for what comes next.

What’s being proposed

The consultation, which closed on 4 June 2026, sets out six changes. Three matter most for our clients and yours:

• Capital Gains Tax and Inheritance Tax would come into scope, alongside Stamp Duty Land Tax, National Insurance and the Construction Industry Scheme. These are precisely the taxes that turn on valuations: share scheme exits, EOT and growth share disposals, estate and trust planning.
• Individuals and trusts would be brought in for the first time, with no wealth or income threshold beyond the £5 million tax advantage test. Unlike large corporates, most individual and trustee clients have no in-house tax function and no established channel to test a position with HMRC before adopting it.
• A new third trigger would require notification wherever there is more than one credible legal interpretation of the law and HMRC’s view is not known, regardless of whether the taxpayer’s position actually contradicts anything HMRC has published. This is the contentious one: HMRC tried a version of this test when the regime was first designed and abandoned it because “credible” proved impossible to pin down. It’s back, and the consultation still doesn’t define it.

Two further changes are more administrative but still consequential: a single annual notification date rather than one tied to each tax return, and a narrower exemption that would require actual confirmation from HMRC that an uncertainty has been raised, rather than a reasonable belief that HMRC already knows.

None of this is law yet. If it proceeds, HMRC expects to legislate via the next Finance Bill, with the earliest impact on returns filed from 1 April 2028.

Why this changes the conversation about valuations

Valuation is, by its nature, an exercise in judgement. Methodology, discount rates, marketability discounts, minority discounts, volatility assumptions: competent, well-supported professionals can and do land in different places on each of these, particularly for private companies with no market price to anchor against.

Under the current regime, that kind of interpretive judgement matters mainly if HMRC later challenges the valuation, at which point the quality of the reasoning and evidence determines whether it holds up. Under the proposed “credible interpretation” trigger, the same judgement calls could obligate a client to notify HMRC before any challenge exists at all, simply because more than one defensible approach was available.

That has two practical consequences worth raising with clients now, well ahead of any legislation.

First, a valuation report increasingly needs to do more than reach a defensible number. It needs to show its working on the alternatives: what other approaches were credible, why the adopted position was preferred, and whether that choice is genuinely uncontested or one of several reasonable views. That distinction, largely academic today, could become the difference between a notification obligation and none at all.

Second, private clients and trustees are likely to feel this hardest. They don’t have a Customer Compliance Manager or an established route to informally test a position with HMRC, so the burden of working out whether a valuation sits on solid or contested ground will fall more heavily on the professional advisers around the transaction, including us.

What we’d suggest

There’s no need to act on this immediately. It’s a consultation, not legislation, and the earliest realistic effective date is still some years off. But the direction of travel is clear enough that it’s worth starting to prepare rather than waiting for the Finance Bill to force the issue.

For clients working through succession planning, share incentive schemes, or corporate transactions with a valuation-sensitive tax outcome, this is a good moment to have the conversation about how defensible the underlying valuation really is: not just whether it would survive an HMRC enquiry, but whether it’s built to withstand a regime that may soon ask for that judgement to be disclosed up front.

We’re keeping a close eye on the government’s response to the consultation and will follow up once the position is clearer.