A new law in the UK will force businesses to publish a tax strategy including their approach to tax planning and other sensitive issues.

The UK's HM Revenue & Customs yesterday published draft guidance on a new law that will require many businesses to publish a tax strategy. International law firm Pinsent Masons has advised caution over what is published. 

The law, which will come into force this summer, will affect “a swathe of UK businesses” including newer challenger banks and technology companies even if they pay no corporation tax, Pinsent Masons said. It will apply to groups with a turnover from UK companies of more than £200 million ($288 million) or a balance sheet total of more than £2 billion. 

Businesses will have to publish their tax strategy on the internet, setting out their approach to risk management and governance arrangements in relation to UK tax; attitude towards tax planning; risk level in relation to UK tax that they are prepared to accept; and approach towards their dealings with HMRC.

“Large businesses are already burdened by enormous reporting and governance burdens so they are not going to welcome this extra requirement,” said Heather Self, partner of Pinsent Masons. “Whilst some businesses do provide shareholders and other stakeholders with information on their tax strategy, as a whole, they would prefer to keep this on a voluntary basis.”

She added: “We would advise businesses to be very cautious over what they publish. It is likely that legal and reputational risk involved means that these documents will have to be relatively bland. No business is going to want to have this document used as a stick to beat them.”

The measure will be counter-productive if it deters businesses from publishing information which goes beyond what is legally required, she added.

Those that fail to comply with the legislation may be hit with a £7,500 fine. HMRC will be able to issue further penalties of £7,500 on a monthly basis after that.