ICAEW.com works better with JavaScript enabled.


New public interest business protection tax introduced


Published: 01 Feb 2022 Update History

The government has been concerned about failing energy companies. It is introducing a new tax designed to deter the monetisation of assets from critical public interest businesses as a result.

The proposed public interest business protection tax is being introduced in this year’s Finance Bill through government amendments at the report stage of its passage through Parliament. The tax is intended to be in place for only a year but may be extended to 2025.

The tax will be charged on profits that could arise where a business undertakes steps to realise a valuable asset for its own and its shareholders’ benefit, which as a result, precipitates or exacerbates the collapse of licensed gas and energy supplier businesses. It may be extended to other critical public interest businesses by future regulations.

To be the subject to the tax, the following conditions apply:

  • a person must take steps that result in an asset no longer being used or available for use for the benefit of the gas or energy supplier’s business;
  • those steps materially contribute to the business going into special measures, or materially contribute to a significant increase in costs of a business already in special measures; and
  • the person must have been aware (or ought to have been aware) that the steps would have that effect.

This includes all forms of assets, including contractual rights, forward purchase agreements and derivative financial instruments. The tax is 75% of the asset’s adjusted value. The adjusted value is the underlying value of the asset reduced by 10%.

The new tax will only apply where the combined adjusted value of all the assets that are the subject of the steps, including those held by a connected person held in connection with the public interest business, exceeds £100m (referred to in the legislation as the £100m threshold condition).

The special measures referred to above are the special administration regime and the appointment of a supplier of last resort between 28 January 2022 and 27 January 2023.

The tax will apply to a principal taxpayer taking the steps referred to above. Companies that are associated with the principal taxpayer (at some point between the date of the first disqualifying step and the deadline for return relating to the tax) will be jointly and severally liable for the tax. Part 2 of the proposed new Schedule to the Finance Bill provides more details on this, together with details of the circumstances in which other persons may also be liable for a proportion of the tax. For example, because they receive proceeds from the steps or because they hold an interest in the principal taxpayer.

The person with the principal tax liability must file a return including a self assessment and supporting documentation to HMRC within 30 days of whichever of the following comes later:

  • The person becoming liable to the tax
  • The gas or energy supplier business going into special measures
  • The date the £100m threshold condition is met
  • Royal Asset of FA 2022

Payment of the tax is due 15 days after the date by which the return must be filed. An administration framework for the new tax is set out in Part 3 of the proposed new Schedule, which includes the following details:

  • HMRC must raise an enquiry into a return within 12 months of its submission or amendment.
  • If a return is not filed on time, HMRC can make a determination of the amount of tax the relevant offer believes to be due.
  • HMRC can amend a return during the course of an enquiry if it is of the view that the self assessment is insufficient and there will be a loss of tax if it is not immediately amended.
  • Where a partnership is liable to the tax, all its partners are jointly and severally liable.
  • A person is chargeable to tax whether or not they are resident in the UK.

Part 4 sets out supplementary provisions, which include an anti-avoidance provision designed to counteract any arrangements with a main purpose of reducing or avoiding a charge to the tax. It also confirms that this tax cannot be taken as deduction for income tax, capital gains tax or corporation tax purposes.

Further reading

Draft amendments for the public interest business protection tax

Tax information and impact note on the public interest business protection tax

Technical note on the public interest business protection tax

Explanatory note for the public interest business protection tax

Tax Faculty

This guidance is created by the Tax Faculty, recognised internationally as a leading authority and source of expertise on taxation. The Faculty is the voice of tax for ICAEW, responsible for all submissions to the tax authorities. Join the Faculty for expert guidance and support enabling you to provide the best advice on tax to your clients or business.

More support on tax

ICAEW's Tax Faculty provides technical guidance and practical support on tax practice and policy. You can sign up to the Tax Faculty's free enewsletter (TAXwire) which provides weekly updates on developments in tax.

Sign up for TAXwireJoin the Tax Faculty

More from the Tax Faculty

Latest news
Making tax digital image

Stay up to date with the latest developments in tax by signing up to the Tax Faculty's weekly e-newsletter

Practical guidance

Comprehensive support for Tax practitioners each month from the Tax Faculty and expert contributors.

Technical support
Tax Faculty image

Expert advice from the Tax Faculty's technical managers on all the developments in tax policy and practice.