HMRC issue charging notices to UK CFCs for recovery of unlawful state aid

HMRC issue charging notices to UK CFCs for recovery

This article looks at what taxpayers who receive such a charging notice should do next.


HMRC have started issuing charging notices following the decision of the EU Commission on State aid (SA.44896) in relation to Chapter 9 of the UK's Controlled Foreign Company (CFC) rules. HMRC have indicated that they intend to issue notices to all affected taxpayers during January and February 2021. The ‘charging notice’ is similar to a corporation tax assessment, but with a number of important differences, in particular relating to time limits. If your business has received or expects to receive such a charging notice please read on for further advice.

What do you need to do next?

  • Send a Notice of Appeal to HMRC – You have 30 days from the date of the charging notice to do this;
  • Requirement to pay the amount – You have 30 days from the date of the charging notice to pay the unlawful state aid to HMRC;
  • Make consequential amends – You have 60 days from the date of the charging notice to make any consequential amends;
  • Appeal to Tribunal – If HMRC reject your initial notice of appeal you have 30 days from the date of HMRC’s rejection of your notice of appeal to request an independent review or file your notice of appeal with the First-tier Tribunal (you can still appeal to the Tribunal if the independent review is negative); and
  • Interest – Interest is payable on the amounts covered by charging notices and is calculated on a compound basis. These are the subject of separate ‘interest charging notices’ which are not appealable. However, we recommend that you write to HMRC seeking confirmation that the interest will be repaid if your appeal against the Charging Notice is successful. This may also help to establish grounds for judicial review in the event that HMRC do not repay the interest in due course.

Given the various time limits we would strongly recommend that taxpayers prepare for the receipt of a charging notice in advance of notices being served. Please speak to your usual KPMG contact or one of the contacts listed below for further assistance regarding the above.

For further information please contact :

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