Companies or advisers: Who owns the tax position?

In summary

• Tax return preparers cannot simply rely on third-party advice. Material positions should be understood and challenged where appropriate

• Reviews should be proportionate, reflecting the complexity, materiality and risk of the position

• Companies remain responsible for the accuracy of their tax returns, even where professional advice has been obtained

• Historical advice should be revisited where facts, structures, overseas tax outcomes or legislation have changed

• Sharing underlying advice early helps identify risks and avoid duplication of effort

• A more robust review process can reduce disputes, penalties and costly remediation

Recent changes to Professional Conduct in Relation to Taxation (PCRT) and HMRC’s GfC13 have brought renewed attention to how companies and their tax return preparers rely on advice from other advisers. The underlying responsibilities are not new, but there is increasing emphasis on the steps needed to discharge them.

A company's corporation tax return is rarely the product of a single adviser. Positions may originate from transfer pricing specialists, legal advisers, restructuring projects or overseas group teams, creating questions about how far companies and return preparers can rely on third-party advice.

This raises two questions: to what extent can the adviser preparing and submitting the return rely on positions determined elsewhere? And, to what extent can the company rely on the advice it has been given?

Recent changes to Professional Conduct in Relation to Taxation (PCRT), alongside HMRC’s increasingly detailed Guidelines for Compliance (GfCs), make both questions more important for advisers and companies alike.

The underlying principle is not new. PCRT helpsheet A has long dealt with the position of a member acting as agent who is asked to include in a tax filing a position based on third-party tax advice.

It makes clear that an adviser is not generally required to audit information supplied by the client or a third party. However, where third-party tax advice is reflected in a filing, the adviser should consider whether the advice is reasonable, whether it accords with their understanding of the law and whether it was provided by someone appropriately qualified.

What has changed is the wider framework in which those judgements now sit. Revisions to PCRT took effect from 1 January 2026, bringing it more closely into line with international ethical standards. While the fundamental principles remain unchanged, the revised framework places greater emphasis on professional judgement, third-party relationships, second opinions and documenting tax decisions.

Reviewing a tax position is not the same as reperforming the underlying analysis. However, return preparers should understand the basis of a position, assess whether it aligns with their knowledge of the business and investigate any inconsistencies or unresolved concerns. For a material or complex position, the questions fall into three groups:

• Facts: Are the assumptions underlying the advice still correct, is the conclusion consistent with what we know about the business, and have the structure or arrangements changed?

• Law: Have there been relevant changes in legislation, case law or published guidance since the advice was given?

• Source: Was the advice provided by someone with appropriate expertise, and does it cover the period being filed?

For many positions, the answers will be quick whilst others may need more work. Either way, record what was considered and concluded. If the position is later challenged, that record supports the case that reasonable care was taken.

The same principle applies to the company. HMRC published GfC13, “Help ensuring documents filed with HMRC are correct and complete”, in September 2025. It does not change the law or HMRC policy, but sets out HMRC’s view of the steps a taxpayer should take before declaring that a return is correct and complete.

Proportionality is again central: HMRC says the steps taken should reflect the level of uncertainty involved, the potential tax impact and the complexity of the arrangements. Obtaining professional advice does not transfer responsibility for the return from the company to its adviser. HMRC expects a taxpayer to provide its adviser with all relevant information, seek to understand the advice and check the work undertaken to the best of its ability and competence, and to consider whether further assurance is required.

This has a direct bearing on penalties. Whether relying on advice amounts to reasonable care depends on how the company engaged with it, and GfC13 sets out what HMRC will expect to see.

Take a transfer pricing adjustment calculated by another adviser, which the return preparer has been asked to include. The functional analysis describes the UK company as a routine distributor. The preparer knows the UK business has recently taken on product development and now makes key decisions on pricing and market strategy. That inconsistency should be followed up before the adjustment goes into the return.

Financing positions raise the same issue. Suppose a return includes a deduction for interest on a loan relationship entered into several years ago. Detailed advice was taken at the time, but the position has been rolled forward each year without review. Since then, the original lender has been replaced by a related party in another jurisdiction, where the interest is not fully brought into account for tax purposes. Part of the borrowing now also funds acquisitions rather than the working capital purpose on which the advice was based. The first change potentially engages the anti-hybrid rules, and the second the unallowable purpose rule. Both call for updated analysis rather than an assumption that the original advice still holds. A treatment adopted in previous returns is not, of itself, a basis for continuing it.

Specialist claims are no different. Suppose an external specialist prepares a claim that includes the full cost of the company's engineering team, as it has for the past five years. Teams and projects change, so the preparer should check that the facts and assumptions underpinning the claim still hold for the current period. The preparer does not need to reperform the specialist's analysis, only to confirm that its basis remains appropriate. That also gives the company a useful additional check.

Companies should expect their advisers to ask more questions about material positions that originate elsewhere: to see the underlying advice rather than just a number to include in the tax return, to confirm that important factual assumptions remain valid and, in some cases, to recommend that older analysis is refreshed or that a specialist considers a particular point.

The aim is not to duplicate work, but to apply an appropriate level of assurance. Agreeing at the outset who will review third-party positions, and to what depth, helps avoid both gaps and duplication.

Advice that clearly sets out the relevant facts, assumptions and tax conclusions also helps – it is much easier for another adviser to assess than a number or conclusion provided without its supporting analysis.

Identifying a question does not mean that the underlying tax treatment is wrong, and not every question requires a lengthy technical review. Often the first step will simply be to clarify the facts or discuss the issue with the adviser who originally considered it, which may confirm that the existing analysis remains appropriate. What neither the company, nor its adviser, can do is carry a position forward once there is reason to doubt it, without first addressing that doubt.

In some cases, that will need a fuller review of the issue, the level of risk and the impact on the return. There may be a material uncertainty to consider or disclose – for larger businesses potentially under the uncertain tax treatment notification rules – or a change in facts may mean that an earlier conclusion needs to be revisited.

Where concerns remain, a fuller review may be required and material uncertainties may need to be disclosed. If a previously filed return is no longer correct and complete, HMRC expects businesses to take appropriate steps to correct it. Failure to do so can affect the company's position on reasonable care and penalties.

GfC13 is clear that all relevant steps should be taken to do so, whether by amending the return within the 12-month window or, after that, by contacting HMRC.

Historically, when a tax computation included a position originating elsewhere, the first question might have been "who advised on this?”.

That remains useful, but it should no longer be the only question.

Companies and advisers should also be asking what the advice actually says, what facts and assumptions it relies upon, and whether there is still a reasonable basis for reflecting that position in the current year’s return. In many cases, a proportionate review will quickly confirm that there is.

Ultimately, responsibility for a tax position rests with the company filing the return. Advisers play an important role, but both parties should understand the basis of material positions and be satisfied they remain appropriate. Addressing uncertainties before filing is invariably preferable to defending them during an HMRC enquiry.