The strategy must be published for all accounting periods beginning on or after 15 September 2016.

Organisations will need to set out:

• their approach to risk management and governance arrangements in relation to UK taxation, 
• their attitude towards tax planning,
• the level of risk that they are prepared to accept in relation to UK taxation, and 
• their approach to dealings with HMRC.

The strategy must be placed on an organisation’s website in the form of a separate document or as a self-contained part of a wider document and be accessible to the public free of charge.  Penalty measures are also in place to counter non-compliance.

In order to comply with this new requirement, some of the practical issues that you should consider are summarised below:

Internal issues for groups

• If there is an existing strategy, will it be appropriate or will a new UK strategy be required?
• Which entity is responsible for the publication?
• Who in the wider organisation will need to be aware of the requirement to publish (e.g. public relations or corporate affairs teams)?

Public perception

• How will the public react to the strategy?
• Will the tone and language used have the impact you want on relevant stakeholders?

Interaction with existing tax risk management framework

• How do you demonstrate that you follow your tax strategy in practice?
• How will this impact future HMRC risk ratings?

The issue of tax transparency has become increasingly high-profile.  Large businesses have been criticised for appearing to pay less tax in the UK than in other countries and HMRC has been criticised for its settlements with large businesses.  Furthermore, under the BEPS agenda, the international rules are being changed to achieve fairer outcomes.

Against this background of increasing public and press interest in tax, and the calls for greater transparency around taxes, in particular public transparency for large businesses, the UK Government has introduced this legislation. 

The scope of the legislation is widely drawn and it includes: 

• UK companies that meet the appropriate thresholds (see below);
• UK companies or groups, regardless of size, that are part of a Multi-National Enterprise (‘MNE’) group with a consolidated turnover in excess of €750 million;
• UK companies that are not part of an MNE group but when aggregated with other UK companies in the same group, the aggregated turnover and/or balance sheet thresholds are met;
• Partnerships that meet the thresholds;
• Groups headed by other ‘relevant bodies’ such as building societies, universities and industrial and provident societies are within scope if they have at least two UK companies in the group and those UK companies meet the thresholds. 

An entity is in scope if on the last day of the previous accounting period it exceeded either of the following thresholds, whether on its own or, where appropriate, when aggregated with other UK companies within the same group:

• UK turnover greater than £200 million, or
• UK balance sheet assets totalled more than £2 billion.

The scope is not extended to open-ended investment companies or investment trusts.

It is the responsibility of businesses to determine whether or not they are within the scope of the legislation.

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At KPMG we have a team of dedicated specialists who can assist you with both the legislative requirements as well as the practical issues by:

• Assisting you to understand what the regime means for you in practice  and insights on how other companies are responding to this;
• Assessing whether you are in scope;
• Assessing whether your tax control framework meets current expectations; 
• Drafting of the strategy document; and
• Operationalising the implementation and embedding of the tax strategy across your organisation and put in place metrics to evidence that the tax strategy has been embedded.

For further information please contact:

Chris Downing

Peter Honeywell

Chris Davidson 

Mark Body