UTT12300 - Scope: entities in scope

Uncertain Tax Treatment (UTT) only applies to large businesses with a UK turnover above £200 million and/or a UK balance sheet total over £2 billion. It applies to partnerships and limited liability partnerships (wherever formed, incorporated, or managed and controlled) that satisfy these criteria, as well as corporates (wherever incorporated or tax resident).

Therefore, UK branches and permanent establishments of non-UK resident companies and partnerships are within scope.

Entities must meet the following criteria to be in scope:

Paragraph 2(2) -

A company is a “qualifying company” in any financial year if, in the previous financial year, the company had either or both of the following—

(a) relevant UK turnover of more than £200 million.(b) a relevant UK balance sheet total of more than £2 billion.

Paragraph 4(3) -

- A partnership is a “qualifying partnership” in any financial year if, in the previous financial year, the partnership had either or both of the following—

(a) UK turnover of more than £200 million; and,or

(b) a UK balance sheet total of more than £2 billion

Refer to UTT12100 to quantify the turnover and balance sheet threshold when non-UK resident partnerships and non-UK resident companies are involved.

Exclusions

There will be some entities that will satisfy turnover and balance sheet criteria but are not intended to be in scope. These are excluded from the scope of the legislation rather than certain transactions being exempt.

The Treasury may set regulations providing those partnerships of a specific description are not qualifying partnerships for UTT (paragraph 4(4)).

Joint ventures are generally not within scope (unless it meets the statutory definition of a partnership).

Authorised unit trusts (AUTs), and unauthorised unit trusts (UUTs) are not within scope because they are not body corporates (paragraph 2(1)). However, open-ended investment companies (OEICs), as defined by Section 613 of CTA 2010, are body corporates but are specifically excluded from scope (paragraph 2(1)(c)).

Similarly, collective investment schemes (CIS) and alternative investment funds (AIF) which are partnerships are specifically excluded from scope (paragraph 4(2)).

Cooperatives are also excluded from the scope.

Public Authorities, and 100% wholly owned subsidiaries of a public authority (or authorities), do not satisfy the criteria of ‘company’ within paragraph 2(1) and are therefore not within scope. However, if the Public Authority has only partial ownership of an incorporated subsidiary that satisfies the criteria in paragraph 2(2), that subsidiary is within scope. The turnover and balance sheet of the Public Authority is not included when calculating the threshold of the subsidiary because a company is only a member of a group where it is 51% subsidiary of another company, and Public Authorities are not a ‘company’ for the purposes of UTT.

Clarification can be found regarding the exclusions of a ‘company’ in paragraph 2 with paragraph 2(1)(b) and 2(1)(d) confirming specific exclusions for public authorities.

Paragraph 2(1)(b) refers to section 3 of the of the Freedom of Information Act 2000 (FOI provisions include England, Wales and Northern Ireland). A Scottish public authority is defined by the Freedom of Information (Scotland) Act 2002 (asp 13).

Schedule 1 to FIA 2000, clarifies the bodies that are included within the definition as being:

  • Government departments, legislative bodies, and the armed forces
  • Local government
  • National Health Service
  • Maintained schools and further and higher education institutions which will also include universities.
  • Police
  • Other public authorities (this includes a list of individually named non-departmental public authorities)

This covers all relevant sectors in Public Authorities with the exception of housing associations which are covered by including Co-operative and Community Benefit Societies; paragraph 2(1)(d) within the exclusion list which states a registered society within the meaning of:

  • the Co-operative and Community Benefit Societies Act 2014, or
  • the Co-operative and Community Benefit Societies Act (Northern Ireland) 1969 (c. 24 (N.I.)).