If a qualifying multinational does not publicly disclose information relating to their UK tax strategy, they may face penalties and reputational implications.
Beginning in 2017, every year qualifying multinationals must:
- Publish their UK tax strategy publically online
- Set out their strategy document either on a standalone basis or as a self-contained part of a wider document
- Ensure that the strategy is available online until the next year's strategy is published.
Disclosure requirements apply as of the first accounting period starting on or after September 15, 2016. Disclosures must be made by the end of that period (e.g., companies that have a September 30, 2017 year-end must publish their UK tax strategy by September 30, 2017).
Among other things, the strategy must incorporate:
- The company's or group's approach to risk management and governance arrangements in relation to UK taxation
- The level of risk that the company or group is prepared to accept in relation to UK taxation
- The company's or group's approach to its dealings with UK tax authorities
The scope of the legislation includes:
- Multinationals that have annual global revenue of over €750M and a UK taxable presence (i.e., the mandatory UK reporting requirement under country-by-country reporting)
- Multinationals with UK revenue over £200 million or UK gross assets that exceed £2 billion.
Potential consequences of non-compliance with the new rules include:
- Initial fixed penalty of £7,500
- Additional penalty of £7,500 after six months of not publishing and an additional £7,500 penalty for each month after that date if the publication has still not been made
- Reputational risk and damage to public perception
- Potential increased scrutiny from the UK (and possibly other) tax authorities.
For more information, contact your KPMG adviser.