The policy, which is due to come into effect on 1 April, has been designed to reduce the legal interpretation portion of the tax gap by helping HMRC identify more legal interpretation issues at an earlier stage. It puts the onus on businesses to inform HMRC about instances where possible tax arrangements could counteract existing decisions in tax tribunal hearings which HMRC has adopted as standard guidance and treatment of tax.

The uncertain tax treatment rules affect corporation tax, income tax and VAT, and cover companies or partnerships with a UK turnover above £200m and UK balance sheet total over £2bn.

There are two notification criteria, including when a provision is made in the accounts, and whether a tax treatment has been selected which does not use an interpretation or application of the law used by HMRC.