In its third update on Pillar 2, HMRC has provided clarity on various aspects of the rules and outlined its plans for the coming months, including the next phase of its Pillar 2 online service.
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, effective for accounting periods starting on or after 31 December 2023.
Groups with consolidated revenue exceeding €750 million must register with HMRC within six months after the end of the accounting period in which they first fall under the Pillar 2 rules.
HMRC is dispatching two types of letters to businesses. The first type is sent to large businesses through their customer compliance managers, while the second is directed at businesses that have either subscribed for updates on Pillar 2 or are likely to be within its scope.
Key points in the letters include:
a. Scope and Obligations: Businesses within the scope of MTT and/or DTT will have reporting obligations, even if they have no MTT and/or DTT liabilities.
b. Online Service Development: The letters update businesses on the development of HMRC’s new online service for Pillar 2 reporting and payment obligations. Businesses can now register for the service, with the next stage, allowing payments on account, expected to be released in autumn 2024.
c. Guidance and Resources: The letters direct businesses to HMRC’s draft guidance on Pillar 2, with additional guidance to be published in the coming months, including details on calculating top-up tax amounts. HMRC will offer several webinars in autumn 2024. The letters also reference guidance published by the government in December 2023 on legislative amendments and recent OECD publications.
d. Transitional Safe Harbour: Businesses are reminded of the potential benefits of the transitional safe harbour, which may simplify compliance with Pillar 2. An overview of the transitional safe harbour is provided, with a reference to detailed guidance at MTT15900 onwards.
This comprehensive communication aims to ensure businesses are well-prepared for the implementation of Pillar 2 and aware of their reporting and payment obligations.
Groups caught by the provisions of Pillar 2 must register with HMRC online here, within six months of the end of the first accounting period to begin on or after 31 December 2023. The full draft guidance on the new Multinational Top Up Tax can be found here.
Author
Gill Laing is a qualified Legal Researcher & Analyst with niche specialisms in Law, Tax, Human Resources, Immigration & Employment Law.
Gill is a Multiple Business Owner and the Managing Director of Prof Services Limited - a Marketing & Content Agency for the Professional Services Sector.
