The multinational top-up tax (MTT) and the domestic top-up tax (DTT) have been introduced as part of the UK’s adoption of the OECD’s Pillar 2 rules. They apply for accounting periods that begin on or after 31 December 2023. A group with consolidated revenue above €750 million must register with HMRC within six months from the end of the accounting period in which it first comes within the scope of the Pillar 2 rules.
HMRC is sending out two types of letter to businesses. The first is being sent to some large businesses through their customer compliance managers. The second is going to other businesses that have either signed up to receive updates on Pillar 2, or haven’t signed-up but are likely to be in scope of Pillar 2.
The letters:
- Inform businesses that if they are in scope of MTT and/or DTT, they will have reporting obligations even if they have no MTT and/or DTT liabilities to pay.
- Update businesses on the development of HMRC’s new online service for meeting Pillar 2 reporting and payment obligations. HMRC is releasing the service in stages and businesses can now register for the service. The letter explains how to do this. HMRC expects to release the next stage of the service in autumn 2024. This will allow the business to make payments on account.
- Point businesses to HMRC’s draft guidance on Pillar 2 and explain that more guidance will be published in the coming months, including details on how to determine top-up tax amounts. HMRC will offer a number of webinars in autumn 2024. Also, HMRC refers to guidance published by the government in December 2023 on amendments to the legislation and to guidance published recently by the OECD.
- Remind businesses that they may be able to take advantage of the transitional safe harbour. This may make it easier for the business to comply with Pillar 2. The letter provides an overview of the transitional safe harbour and refers to HMRC’s detailed guidance at MTT15900 onwards.
For further information, see ICAEW Tax Faculty’s TAXguide 06/23: A basic guide to pillar two.
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