Finance Act 2022

Threshold test

11 (1) This paragraph and paragraphs 12 to 17 apply for determining, in relation to an uncertain amount included in a relevant return, whether the threshold test is met (see paragraph 8(4)(b)).

(2) The threshold test is met if it is reasonable to conclude that, by bringing the uncertain amount into account for the purposes of a relevant tax—

(a) the company or partnership would obtain a tax advantage it would not obtain if the uncertain amount were the expected amount, and

(b) in the relevant period, the aggregate value of all such tax advantages that would be obtained by bringing the uncertain amount, and any related uncertain amounts, into account is more than £5 million.

(3) For these purposes—

(a) “tax advantage”—

(i) in relation to income tax or corporation tax, has the meaning given by paragraph 12;

(ii) in relation to VAT, has the meaning given by paragraph 13;

(b) the value of the tax advantage is determined in accordance with paragraph 14;

(c) the “expected amount”, in relation to an uncertain amount, is determined in accordance with paragraph 15;

(d) the “relevant period” is determined in accordance with paragraph 16;

(e) whether two or more uncertain amounts are “related” is determined in accordance with paragraph 17.

(4) Where the relevant period is more than or less than 12 months, the sum specified in sub-paragraph (2)(b) is to be proportionately increased or reduced.

(5) The Treasury may by regulations amend sub-paragraph (2)(b) by substituting a different sum for the sum that is for the time being specified.