The Uncertain Tax Treatment (UTT) notification regime has been in force since April 2022. Since then, it has applied to large businesses — those with turnover above £200m or assets above £2bn — with uncertain tax positions above a £5m threshold. In June 2026, the regime expands. More companies will fall in scope. The threshold will change. And HMRC's AI systems will be specifically calibrated to identify companies that should be notifying but are not.
This is the most practically significant change to UK corporate tax compliance in the current regulatory cycle. This guide explains what it means and what to do about it.
What UTT notification requires
A company subject to the UTT regime must notify HMRC when it takes a tax position that meets two conditions:
-
It is uncertain. Defined as a position where, based on the balance of probabilities, a tribunal or court would not uphold it — or where the company has recognised uncertainty in its accounts (under IFRIC 23 or otherwise).
-
The threshold is met. Under current rules, the threshold is £5m (measured as the potential additional tax liability if HMRC's view prevailed).
When both conditions are met, the company must submit a notification to HMRC within the relevant return filing window — effectively disclosing that it has taken a position it knows is arguable.
The notification is not an admission that the position is wrong. It is a disclosure that it is uncertain. HMRC uses these notifications to prioritise their compliance activity — and to identify companies that have not notified positions that they arguably should have.
What changes in June 2026
The June 2026 expansion has three key elements:
Lower revenue threshold. The expansion brings companies with turnover above £100m (reduced from £200m) into scope. This is a significant expansion of the population — there are considerably more UK companies with £100–200m turnover than above £200m.
Revised monetary threshold. The £5m position threshold is being revised. The revised threshold has not yet been confirmed in legislation, but HMRC's consultation indicated a move to a lower figure for the newly in-scope companies.
Enhanced HMRC data matching. The timing of the expansion is not coincidental. HMRC has been building AI capability specifically designed to identify companies newly in scope of the UTT regime and cross-reference their tax positions against the notification requirements. Companies that are newly in scope and have not yet assessed their uncertain positions are the primary target.
What IFRIC 23 requires
The accounting standard IFRIC 23 (Uncertainty over Income Tax Treatments) applies to all companies that prepare accounts under IFRS (and is the basis for equivalent treatment under UK GAAP). It requires companies to:
- Identify all uncertain tax positions — those where the tax treatment is not certain to be accepted by the tax authority
- Assess each position using either the most likely amount method or the expected value method
- Recognise a liability where it is probable that a tax authority will challenge the position
- Disclose uncertain tax positions in the accounts where material
The IFRIC 23 assessment is therefore the foundation for UTT notification analysis. A company with a rigorous IFRIC 23 process will have already identified the positions that need to be assessed for UTT purposes.
In practice, many companies' IFRIC 23 processes are less systematic than they should be — particularly in the middle market (£100–500m revenue), where the expansion will hit hardest.
How AI is changing the identification process
Identifying uncertain tax positions systematically is exactly the kind of task where AI adds genuine value. The challenge with manual UTP review is consistency: it relies on a tax professional's judgment applied to workpapers that were not designed to be machine-readable, in a process that varies from year to year.
An AI-assisted approach — where workpapers are ingested, structured, and assessed against IFRIC 23 criteria automatically — produces more consistent results, creates a documented assessment trail, and scales to volumes that manual review cannot.
The Tax Haus UTP Automation Tool does this: it ingests workpapers and ERP outputs, identifies positions that meet the IFRIC 23 assessment criteria, scores them for probability of HMRC challenge, and drafts disclosure-ready outputs for human review. The human tax professional reviews, edits, and approves — the AI provides the systematic foundation.
The SAO audit trail is built in: every AI assessment and every human decision is logged.
Practical steps for in-scope companies before June 2026
Step 1: Confirm whether you are newly in scope. If your group has turnover between £100m and £200m, you will be subject to the UTT regime from June 2026. If you are already in scope, use the expansion as a prompt to review whether your existing processes are adequate.
Step 2: Review your IFRIC 23 positions. Map your current uncertain positions. This is not just a compliance exercise — it is the foundation for your UTT notification analysis. Be systematic: review all material transactions and structures for uncertainty, not just the ones that have historically been flagged.
Step 3: Assess each position against the UTT criteria. For each uncertain position above the relevant threshold, assess whether it meets the UTT notification requirements. This requires a view on both the probability of HMRC challenge and the quantum of potential additional tax.
Step 4: File notifications where required. If positions meet the UTT criteria, notify HMRC within the applicable window. Early and accurate notification is better than a late discovery — HMRC's approach to companies that proactively disclose is materially different from those where positions are identified through enquiry.
Step 5: Document your process. The SAO implications of the UTT regime are significant. Your identification, assessment, and notification process should be documented — both for SAO certification purposes and to support your response to any HMRC enquiry.
The cost of getting it wrong
HMRC's penalties for failure to notify range from £5,000 to £25,000, depending on the circumstances and whether the failure is deliberate. More significant than the penalty is the reputational and enquiry risk: a company that HMRC's AI identifies as in scope but non-notifying is likely to face enhanced scrutiny of its broader tax position.
The expansion of the UTT regime is one of the clearest examples of HMRC using AI to shift the burden of compliance onto taxpayers systematically. The appropriate response is to meet that standard — systematically, with documented process, and with AI assistance where it helps.
Tax Haus specialises in UTP disclosure automation and AI implementation advisory for large UK corporates. Explore the UTP Automation Tool or get in touch to discuss your specific situation.
Topics