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The government has launched a consultation on the development of a new process giving major investment projects increased tax certainty in advance. The proposal is for a dedicated service which provides statutory certainty over how the tax rules will be applied to an investment project if it proceeds as planned.
The focus of the clearance service will be corporation tax, although the consultation asks whether there would be a benefit for other taxes, such as VAT and stamp taxes.
Areas under consultation include eligibility, whether applicants should be charged for using the service, and the possibility of publishing summarised and anonymised clearances. Unlike some of the existing clearance processes, the new service will not require the demonstration by the business of 'genuine uncertainty'.
The clearance process would include key steps, including a written application, a scoping meeting and a decision, as well as a voluntary pre-application meeting.
In addition, HMRC will offer clearance on the UK transfer pricing treatment of Cost Contribution Arrangements via unilateral Advance Pricing Agreements (APAs) under existing legislation. The APAs will provide certainty that Cost Contribution Arrangements will be respected as the framework for transfer pricing.
The service would be open to the very largest major investment projects. The government expects that ‘dozens’ of projects would be eligible each year, with each project likely to entail qualifying expenditure in the ‘hundreds of millions’. Smaller investment projects may be included if they are considered to be of national or strategic importance.
Comments are invited by 17 June 2025. The government intends for the new process to be implemented in 2026.
The government is looking to provide certainty through a bespoke, tailored service for the largest investments. This will bring the UK in line with other countries that offer such certainty, increasing its attractiveness to investment.
Businesses have long-valued certainty, stability and transparency in relation to their tax affairs, particularly where large investments are at stake, and will be keen to support this process.
The move to provide certainty on the transfer pricing treatment of cost contribution arrangements – as heralded in the Corporation Tax Roadmap – will be a welcome signal to the business community that action is being taken.