Tax Take
Customs and excise quarterly update February 2020
In this update we report on the government’s plans to (1) introduce 10 new freeports; (2) introduce import controls; and (3) its consultation into the UK’s tariff policy following the UK’s departure from the EU. We also comment on three recent cases relating to (1) time limits to issue a post-clearance demand under the Community Customs Code; (2) tariff classification of fluid and blanket warming cabinets used in hospitals; and (3) what constitutes “complicity” in the context of smuggling.
Read moreSnow Factor – Tribunal applies Halifax principle to redefine supplies of winter sports training
In Snow Factor Ltd and Snow Factor Training Ltd v HMRC [2019] UKFTT 0664 (TC), the First-tier Tribunal (FTT) found that certain VAT arrangements were abusive within the scope of the Halifax principle, and redefined supplies of winter sports training by a non-profit making company as a supply by its profit making parent and therefore as falling outside the education exemption in Item 1, Group 6, Schedule 9, Value Added Tax Act 1994 (VATA).
Read moreCharnley - Tribunal puts HMRC out to pasture in allowing business and agricultural relief
In W Charnley and M Hodgkinson as executors of the estate of Thomas Gill (deceased) v HMRC [2019] UKFTT 0650 (TC), the First-tier Tribunal (FTT) confirmed that inheritance tax agricultural property relief (APR) and business property relief (BPR) was available in relation to Mr Gill's estate.
Read moreTax update - February 2020
In this month’s update we report on (1) HMRC’s Venture Capital Schemes Manual; (2) the review into the off-payroll working rules; and (3) a briefing paper regarding retrospective taxation put before the House of Commons. We also comment on three recent cases relating to (1) the meaning of “structure” for the purposes of capital allowances; (2) an HMRC challenge to carry-back loss relief claims; and (3) principal private residence relief.
Read moreDevon Waste Management – Waste firms win appeal in landfill 'fluff' case
In Devon Waste Management Ltd and Others v HMRC [2020] UKUT 1 (TCC), the Upper Tribunal (UT) has held that the disposal of certain waste materials did not attract a charge to landfill tax.
Read moreVAT update - January 2020
In this month’s update we report on (1) changes to the rules relating to distance selling; (2) changes to VAT for intra-EU chain transactions and zero rated goods; and (3) HMRC’s guidance on proposed changes to the VAT treatment of call-off stock arrangements. We also comment on three recent cases which consider (1) whether VAT zero rating is available for electronic editions of newspapers; (2) the scope and meaning of “services of consultants”, for the purposes of Article 59(c), Principal VAT Directive; and (3) the deductibility of input tax on fees incurred in implementing a tax scheme.
Read moreLloyd-Webber – capital gains losses allowed over properties which were never completed
In Lloyd-Webber and another v HMRC [2019] UKFTT 717 (TC), the First-tier Tribunal (FTT) has held that a payment made under a contract for the acquisition of land was for the acquisition of contractual rights, rather than for the land, giving rise to an allowable loss on termination of the contract.
Read moreSSE Generation – UT considers the meaning of structure for the purposes of capital allowances
In HMRC v SSE Generation Ltd [2019] UKUT 332 (TCC), the Upper Tribunal (UT) dismissed HMRC's appeal against the decision of the First-tier Tribunal (FTT) that the taxpayer was eligible for capital allowances in relation to certain expenditure it incurred in connection with the construction of the Glendoe Hydro Electric Power Scheme.
Read moreTaylor Pearson – input tax on fees incurred in implementing a tax scheme
In Taylor Pearson (Construction) Limited v HMRC [2019] UKFTT 691 (TC), the First-tier Tribunal (FTT) has held that input tax on fees incurred in implementing a tax scheme, intended to remunerate directors in a tax efficient manner, was deductible.
Read moreHiggins – for the purposes of PPR relief "period of ownership" starts on completion
In Desmond Higgins v HMRC [2019] EWCA Civ 1869, the Court of Appeal has held that the date of acquisition of an off-plan property for the purposes of principal private residence relief (PPR) was the date of completion and not the date of exchange of contracts.
Read moreJafari – HMRC criticised for breach of its duty to assist the Tribunal
In Jafari v HMRC [2019] UKFTT 692 (TC), the First-tier Tribunal (FTT) criticised HMRC for failing in its duty to bring relevant authorities to its attention.
Read moreContentious tax quarterly review (Q4 2019)
In this quarterly review we consider: HMRC’s increasing propensity to seek to strike out the taxpayer’s case; recent developments in relation to IR35; the timing of tribunal decisions; and the potential implications of the Inverclyde decision.
Read moreKnibbs – HMRC's challenge to carry-back loss relief claims was correct
In Knibbs and ors v HMRC and R (oao Astley and ors) v HMRC [2019] EWCA Civ 1719, the Court of Appeal has held that Schedule 1B, Taxes Management Act 1970 (TMA) can apply to a claim for carry-back loss relief.
Read moreTax update - December 2019
In this month’s update we report on (1) two recent decisions concerning insolvent companies and EBTs in the context of insolvency law; (2) proposed legislation on HMRC’s use of automated processes; and (3) the taxation of cryptoasset transactions using exchange tokens. We also comment on three recent cases relating to (1) legitimate expectation; (2) the payment of costs by HMRC due to its unreasonable behaviour; and (3) the meaning of ‘deliberate’ in the Taxes Acts.
Read moreLocke – Court of Appeal quashes follower and accelerated payment notices
In R (on the application of Locke) v HMRC [2019] EWCA Civ 1909, the Court of Appeal quashed follower and accelerated payment notices issued to a participant in a film finance partnership, because HMRC had been wrong in considering that a judicial ruling was relevant to the arrangements under consideration.
Read moreVAT update - November 2019
In this month’s update we report on (1) the revocation of the Cross-border Trade (Public Notices) (EU Exit) Regulations; (2) the new VAT group provisions; and (3) the digitisation of the tribunal service. We also comment on three recent cases which consider (1) who the recipient of a supply is in circumstances where there is more than one potential recipient; (2) single purpose vouchers and the time of supply; and (3) inaccuracy penalties in the absence of any supply.
Read moreCoal Staff Superannuation Scheme – Taxation of manufactured overseas dividends breached EU law
In HMRC v Coal Staff Superannuation Scheme Trustees Ltd [2019] EWCA Civ 1610, the Court of Appeal dismissed HMRC's appeal and held that the imposition of withholding tax on manufactured overseas dividends was contrary to EU law.
Read moreCustoms and excise quarterly update November 2019
In this update we report on (1) the new customs legislation if the UK leaves the EU without a deal; (2) steel safeguard quotas; and (3) the recent deadline extension for customs authorisations made indirectly. We also comment on three recent cases relating to (1) civil evasion penalties; (2) the meaning of “holding” goods; and (3) tariff classification.
Read moreCorporate tax update November 2019
Welcome to the latest edition of our Corporate Tax Update, written by members of RPC’s tax team. This month’s update reports on the key developments from September and October 2019. No update would be complete in the current climate without a report on a recent IR35 decision (this month, we bring you two). This month’s update also includes summaries as to HMRC’s latest thinking on the regime for offshore receipts in respect of intangible property, as well as case summaries on the interpretation of the UK-Irish double tax treaty, cross-border loss relief and the effect of statements in HMRC’s published manuals.
Read moreAozora GMAC Investment Ltd – HMRC did not breach a taxpayer's legitimate expectation
In R (oao Aozora GMAC Investment Ltd) v HMRC [2019] EWCA Civ 1643, the Court of Appeal has dismissed the taxpayer's claim that a statement in HMRC’s International Manual created a legitimate expectation, because the taxpayer had not relied on it substantively and, even if it had done, there was insufficient "unfairness" in frustrating the taxpayer's expectation.
Read moreFirst Choice – HMRC ordered to pay taxpayer's costs as a result of its unreasonable behaviour
In First Choice Recruitment Ltd v HMRC [2019] UKFTT 412 (TC), the First-tier Tribunal (FTT) held that the taxpayer was entitled to its costs because HMRC had acted unreasonably.
Read moreTax update - November 2019
In this month’s update we report on (1) the government’s response to the Treasury Sub-Committee’s conclusions and recommendations in “Disputing Tax”; (2) the outcome of the consultation into offshore receipts in respect of intangible property; and (3) HMRC’s briefing regarding reform of the off-payroll working rules. We also comment on three recent cases relating to (1) the meaning of “trading company” in the context of entrepreneurs’ relief; (2) whether HMRC can conduct informal enquiries; and (3) the disposal of a business with goodwill and the capital gains tax implications of that disposal.
Read moreCliff: Tax tribunal considers the meaning of ‘deliberate’
In Cliff v HMRC [2019] UKFTT 564, the First-tier Tribunal (FTT) has held that the taxpayer had 'deliberately' submitted an inaccurate return to HMRC.
Read moreVAT update October 2019
In this month’s update we report on (1) how businesses who have paid too much VAT, as a result of an error in the TOMS, can correct it; (2) delays to the introduction of the domestic VAT reverse charge on construction services; and (3) the OTS’s update on its VAT review. We also comment on three recent cases relating to (1) whether a charity’s supply of educational services was for “remuneration”; (2) salary sacrifice arrangements and their effectiveness; and (3) whether an assessment was made to “best judgement”.
Read morePertemps – Upper Tribunal provides guidance on salary sacrifice arrangements
In HMRC v Pertemps Ltd [2019] UKUT 234 (TCC), the Upper Tribunal (UT) has provided helpful guidance on salary sacrifice arrangements and their effectiveness.
Read morePotter – Tribunal considers the meaning of "trading company" in the context of entrepreneurs' relief
In Jacqueline Potter and Neil Potter v HMRC [2019] UKFTT 0554 (TC), the First-tier Tribunal (FTT) has confirmed that the owners of a company were entitled to entrepreneurs relief (ER) as the activities of the company amounted to trading.
Read moreLeeds Cricket Football & Athletic Co Ltd – business with attached goodwill disposed of
In The Leeds Cricket Football & Athletic Company Ltd v HMRC [2019] UKFTT 0568 (TC), the First-tier Tribunal (FTT) has held that the freehold in a cricket ground involved the disposal of a business with attached goodwill and was not simply a disposal of land with attached income streams.
Read moreJJ Management: No need to stand on formalities
It would appear from the decision of the High Court in R (oao JJ Management LLP and Ors) v HMRC [2019] EWHC 2006 (Admin), that HMRC can conduct informal enquiries outside of section 9A, Taxes Management 1970 (TMA).
Read moreTax update October 2019
In this month’s update we report on (1) the independent review of the disguised remuneration loan charge; (2) HMRC’s guidance on preparing for the off-payroll working changes which come into effect from April 2020; and (3) HMRC’s updated guidance on the tax registration of non-resident companies. We also comment on three recent cases relating to (1) an application for final and partial closure notices; (2) the validity of an enquiry; and (3) pre-entry loss rules.
Read moreRialas – Transfer of assets abroad provisions did not apply
In Rialas v HMRC [2019] UKFTT 520, the First-tier Tribunal (FTT) has found that the transfer of assets abroad (TOAA) provisions, originally contained in section 739 et seq, Income and Corporation Taxes Act 1988 (ICTA) did not apply.
Read moreCorporate tax update September 2019
This month’s update reports on the key developments from August 2019. Although this was a relatively quiet month in the corporate tax world, this update includes summaries of an important Upper Tribunal decision on the correct tax treatment of “trail commissions” and a First-tier Tribunal decision on the recovery of pre-incorporation input VAT.
Read moreDraft Finance Bill 2019/20: HMRC’s new insolvency powers
Piercing the corporate veil? Robert Waterson and Constantine Christofi review the draft provisions that will empower HMRC to issue joint liability notices. (This article was originally posted on Tax Journal)
Read moreVAT update September 2019
In this month’s update we report on (1) changes to the reduced rate for energy-saving materials; (2) the VAT rule changes for higher education; and (3) new regulations amending the rules on when VAT adjustments may be made following a change to the price of goods and services. We also comment on three recent cases relating to (1) the refusal of a claim for the repayment of under-recovered input VAT; (2) the repayment of input VAT charged on the acquisition of single farm payment entitlement units; and (3) a notice of security issued with no explanation for the demand.
Read moreQuentin Skinner – shares sold by trust eligible for entrepreneurs' relief
In The Quentin Skinner 2008 Settlement L and others v HMRC [2019] UKFTT 516 (TC), the First-tier Tribunal (FTT) has held that for a trust to qualify for entrepreneurs' relief (ER) on a disposal of shares, it was not necessary for the trust's beneficiary to have had an interest in possession in the shares for the period prescribed in section 169J(4), Taxation of Chargeable Gains Act 1992 (TCGA).
Read moreContentious tax: quarterly review (Q3 2019)
In this quarterly review, Adam Craggs and Michelle Sloane consider HMRC’s increasing propensity to seek the production of documents from accountants and other professional advisers, HMRC’s new policy of challenging taxpayers’ loan relationships, and the increase in the number of domicile enquiries launched by HMRC.
Read moreTinkler - Notice of enquiry invalid
In Tinkler v HMRC [2019] EWCA Civ 1392, the Court of Appeal has allowed the taxpayer's appeal and held that HMRC's notice of enquiry under section 9A, Taxes Management Act 1970 (TMA), was invalid.
Read moreSmart & Son - Supreme Court confirms VAT incurred on funds raised for business purpose was recoverable
In HMRC v Frank A Smart & Son [2019] UKSC 39, the Supreme Court has held that a farming company was entitled to repayment of input VAT charged on its acquisition of single farm payment entitlement units which were related to its overall economic activities and future taxable supplies.
Read moreTax update - September 2019
In this month’s update we report on (1) HMRC’s consultation on draft regulations implementing the requirement to disclose certain cross-border arrangements; (2) the Financial Secretary to the Treasury’s statement to Parliament on HMRC powers; and (3) the government’s response to the Joint Committee’s recommendations on the Draft Registration of Overseas Entities Bill.
Read moreLevy – Tribunal rejects application for final and partial closure notices
In The Executors of Mrs R W Levy v HMRC [2019] UKFTT 418 (TC), the First-tier Tribunal (FTT), has held that HMRC was not in a position to issue either a final or partial closure notice.
Read moreCorporate tax update August 2019
Welcome to the latest edition of our Corporate Tax Update, written by members of RPC’s tax team. This month’s update reports on the key developments from July 2019 and includes a summary of the key business tax measures coming out of the publication of the draft Finance Bill 2020 legislation. There is also commentary on the draft regulations and consultation document published by HMRC on the UK’s implementation of DAC6 (mandatory disclosure of cross-border tax planning arrangements).
Read moreCustoms and excise quarterly update: August 2019
In this update we report on (1) revised guidance on the Customs Special Procedures for the Union Customs Code; (2) the consultation HMRC has opened into proposed changes to the rules for red diesel used in private pleasure crafts; and (3) the government’s programme to replace EU international agreements with bilateral agreements ready for the UK’s exit from the EU. We also comment on three recent cases relating to (1) whether HMRC has the power to permit temporary trading pending the determination of an appeal to the First-tier Tribunal; (2) excise wrongdoing penalties raised out of time; and (3) an appeal against an assessment for unpaid excise duty.
Read moreANO - pre-ordained transactions avoided CGT losses being caught by pre-entry loss rules
In ANO (No1) Limited v HMRC [2019] UKFTT 406 (TC), the First-tier Tribunal (FTT) has held that a pre-ordained series of transactions implemented to avoid the application of Schedule 7A, Taxation of Chargeable Gains Act 1992 (TCGA) to pre-entry losses were effective.
Read moreInverclyde – Enquiry into LLP returns invalid as opened under incorrect statutory provisions
In Inverclyde and another v HMRC [2019] UKFTT 0408 (TC), the First-tier Tribunal (FTT) has held that enquiries opened, and closure notices issued, to limited liability partnerships (LLPs) were invalid as HMRC should have enquired into the LLPs returns under paragraph 24, Schedule 18, Finance Act 1998 (FA 1998) and not section 12AC, Taxes Management Act 1970 (TMA).
Read moreTax update - August 2019
In this month’s update we report on (1) HMRC’s summary of responses to its ‘protecting your taxes in insolvency’ consultation; (2) HMRC’s policy paper on the misuse of company insolvencies; and (3) HMRC’s new guidance on loan relationships and derivatives regime anti-avoidance rules.
Read moreCorrado – Tribunal cancels follower notice penalties
In Giulio Corrado v HMRC [2019] UKFTT 275 (TC), the First-tier Tribunal (FTT) has set aside a follower notice penalty as the taxpayer's failure to take corrective action in response to a follower notice was reasonable in all the circumstances.
Read moreWarshaw – preference shares equal to ordinary share capital and taxpayer entitled to entrepreneurs' relief
In Steven Warshaw v HMRC [2019] UKFTT 268 (TCC), the First-tier Tribunal (FTT) has confirmed that as the relevant preference shares did not attract a fixed dividend, they could amount to ordinary share capital for the purpose of entrepreneur's relief (ER).
Read moreDevelopment Securities – Jersey-incorporated SPVs held not to be UK tax resident
In Development Securities plc and others v HMRC [2019] UKUT 0169 (TCC), the Upper Tribunal (UT) has held that a number of Jersey-incorporated companies were in fact resident for tax purposes in Jersey. This decision overturned the decision of the First-tier Tribunal (FTT), which had held that the companies were UK tax resident as a result of the central management and control (CMC) of the companies being exercised in the UK (through the companies’ parent). The UT took the view that the FTT had incorrectly concluded that the Jersey company directors had abdicated their decision-making responsibility.
Read moreVAT update July 2019
In this month’s update we report on (1) the revocation of the VAT (Finance) (EU Exit) Order; (2) a recent HMRC Brief that clarifies HMRC’s policy on the scope of VAT for transport services; and (3) new regulations which amend the rules on when VAT adjustments may be made following a change to the price of goods and services.
Read moreCorporate tax update July 2019
Welcome to the latest edition of our Corporate Tax Update, written by members of RPC’s tax team. This month’s report includes summaries of the recent decision of the Upper Tribunal on corporate tax residence in Development Securities plc, two ECJ decisions on cross-border loss relief and yet another decision on the application of the ‘IR35’ rules.
Read moreMarks & Spencer – 'free' wine supplied as part of a promotional offer was subject to VAT
In Marks and Spencer plc v HMRC [2019] UKUT 0182 (TCC), the Upper Tribunal (UT) has upheld the First-tier Tribunal's (FTT) decision that wine supplied 'free of charge' as part of a promotion was subject to VAT.
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