𝐇𝐌𝐑𝐂 𝐂𝐥𝐞𝐚𝐫𝐚𝐧𝐜𝐞𝐬: 𝐖𝐡𝐞𝐧 𝐚𝐧𝐝 𝐇𝐨𝐰 𝐂𝐚𝐧 𝐘𝐨𝐮𝐫 𝐂𝐥𝐢𝐞𝐧𝐭 𝐎𝐛𝐭𝐚𝐢𝐧 𝐓𝐡𝐞𝐦? -

When your client is about to embark on a significant transaction—such as a group restructuring, share-for-share exchange, or demerger—they will often want certainty about the tax consequences before they proceed. In certain circumstances the tax authority, HM Revenue & Customs (HMRC), can provide that certainty via a clearance or approval. GOV.UK+1

In this article we examine:

The most common statutory clearances available.
The process and limitations of non-statutory clearances when no specific legislative clearance regime applies.
Key practical points advisers and clients must know.

1. What Is a Clearance?

A clearance (sometimes called an advance assurance) is a formal request made to HMRC in writing, asking whether certain reliefs or exemptions apply to a proposed transaction or whether anti-avoidance provisions will bite. taxinsider.co.uk+1

If successful, it gives the taxpayer—and their advisers—greater confidence in proceeding. But crucially:

It does not always guarantee all tax outcomes. Many clearances only address whether a particular exemption or section applies. claritastax.co.uk
The clearance request must provide full and accurate disclosure of all facts relevant to the transaction. Any omission may render the clearance void or open to challenge. taxinsider.co.uk

2. Statutory Clearances: Some Key Examples

There are several transaction types with specific statutory clearance regimes. Here are the most commonly encountered ones:

a) Share-for-Share Exchanges (CGT Relief)

Under Taxation of Chargeable Gains Act 1992 (TCGA 1992) s 137, the relief for share-for-share exchanges is disapplied if certain avoidance conditions apply (such as one party holding at least 5% of a class of shares). The acquiring or issuing company may apply under s 138 for a clearance that these conditions are satisfied. taxinsider.co.uk+1

b) Transactions in Securities (TIS)

Under Income Tax Act 2007 (ITA 2007) Part 13 and Corporation Tax Act 2010 Part 15, there’s a clearance regime (e.g., s 701 ITA 2007 or s 748 CTA 2010) through which a person may apply for assurance that HMRC will not issue a counteraction notice in respect of the proposed transactions. taxinsider.co.uk+1

c) Purchase of Own Shares

A company may apply under CTA 2010 s 1044 for clearance that the purchase of its own shares will not be treated as a distribution. Once HMRC issues the notice, it has legal effect. taxinsider.co.uk

d) Demergers and Exempt Distributions

Under CTA 2010 ss 1091 and 1092, companies may apply for clearances in respect of certain demergers, or payments following connection changes, so that distributions are exempt or payments are non-chargeable. taxinsider.co.uk

3. The Clearance Process: What Happens?

The application must be made in writing to HMRC (often via the Clearance & Counteraction Team). taxinsider.co.uk+1
For statutory clearances, HMRC aims to respond (grant/refuse or request further info) within 30 days of receipt. If HMRC requests further information, the applicant then has 30 days to respond or the application may lapse. taxinsider.co.uk
The application must disclose all material facts and the full steps of the proposed transaction. If not, the clearance may later be challenged. taxinsider.co.uk
A single clearance application may cover multiple reliefs or issues in the same transaction—this may be more efficient. taxinsider.co.uk

4. Non-Statutory Clearances: What You Need to Know

When there is no specific statutory clearance regime, taxpayers may still apply to HMRC under the Non-Statutory Clearance Service (NSCS) for an “opinion” on the application of law in uncertain situations. GOV.UK+1

Important points:

HMRC will only consider such an application if there is a genuine uncertainty in the law and the taxpayer has first reviewed official guidance. GOV.UK
HMRC will not grant a non-statutory clearance for pure facts (e.g., asking “is this a trading activity?”) or when the transaction is for avoidance under the general anti-abuse rule (GAAR). GOV.UK
These clearances are not legally binding in the same way statutory clearances are, but where full disclosure has been made a “legitimate expectation” may be argued. taxinsider.co.uk

5. Practical Considerations & Risks

✅ Advantages

Provides reassurance before proceeding with complex transactions.
May reduce risk of future HMRC enquiry or counter-action.

⚠️ Disadvantages / Risks

The clearance process draws attention to the transaction which may lead to increased scrutiny. taxinsider.co.uk
A clearing decision is only reliable if you stick to the transaction as described—any change may invalidate the benefit. claritastax.co.uk
Timing issues: clearances can take weeks or months, especially non-statutory ones. claritastax.co.uk

6. How Cloud 9 Accounting Services Can Help

At Cloud 9 Accounting Services, we support clients in preparing clearance applications to HMRC and assessing whether one is appropriate. We will:

Review whether your transaction falls under a statutory clearance regime or needs non-statutory advice.
Draft the application ensuring full disclosure and appropriate documentation.
Manage the timetable and liaise with HMRC clearance teams.
Advise on risks if you proceed without clearance and help you build a defensible strategy.

📞 Contact us today to discuss whether a clearance for your planned transaction is advisable and how to proceed with confidence.

📌 Final Thoughts

Obtaining HMRC clearance is a valuable tool for managing risk in significant corporate or restructuring transactions. However, it must be used correctly—with full disclosure, rigorous planning and timing accounted for. Failing to apply appropriately may not only delay your deal but also expose you to unwanted tax consequences.

For tailored advice and support in navigating HMRC clearance processes, get in touch with Cloud 9 Accounting Services — we help you proceed with clarity, compliance and confidence.