ATCS02200 - Advance Tax Certainty Service: Eligibility and Scope: Financial threshold for entry to the process
The threshold for entry is £1 billion of qualifying project expenditure in the UK over the lifetime of the project. This amount would be reflected in a corporate business plan or authorised project spend.
The project may have already started, with scoping work and preliminary studies having already taken place. This would not preclude the project from qualifying, but the area on which tax certainty is being sought should not already have been included in a tax return.
In evaluating the threshold, HMRC is seeking to be pragmatic and reflect commercial business approaches. In order to preserve the quality of service, for the initial phase of the Advance Tax Certainty Service, 'project' scope for the purpose of threshold eligibility will take the definition of a standalone project or approved series of highly similar projects with the same areas of tax uncertainty.
Where only phase 1 is authorised, in recognition of the stage-gated nature of very large projects, the projected cost of subsequent phases could be taken into account.
HMRC aims to work with businesses as the service becomes more established to refine the scope of project to better accommodate businesses’ approach to project boundaries and planning.
Qualifying project expenditure is all UK expenditure on the project except for the exclusions set out in the paragraphs below. That means spending on goods and services that are used or consumed in the UK or the UK continental shelf. This includes the acquisition of tangible assets, like plant and machinery, and intangible assets, like software.
The amounts invested should be easily identifiable as being ‘located’ in the UK, such as being an investment in an asset located in the UK, or staff located in the UK.
For example, on a project to build a power station in the UK, engineering services provided by a person not located in the UK should be clearly for the project in scope rather than the applicant’s existing operations.
The investment project must also be a new initiative involving significant investment, with significant being determined by reference to the £1 billion financial threshold.
Financing costs will not be included within qualifying expenditure.
The qualifying expenditure should exclude amounts which are used for investment in equity. This is to prevent transactions which may just be an acquisition of existing UK assets rather than genuine investments which create new assets (for example, transactions which are solely mergers and acquisitions, as well as share buybacks).
It must not be an ongoing, ordinary part of business activity but a new investment. This is to ensure the project meets the objective of facilitating new investment in the UK.