Advance corporation tax meaning

The Organisation for Economic Co-operation and Development has released additional guidance, and later than initially anticipated, on how companies and tax administrations should apply the 15% global minimum levy, known as Pillar Two, according to Gerassimos Thomas, the Commission’s director-general for taxation. As a result, it would be too early for the EU to advance its plan to roll out a common method for determining the tax base of corporate groups throughout the bloc, called Business in Europe: Framework for Income Taxation, Thomas told Law360. 'If we were to adopt BEFIT now and the OECD Pillar Two guidance shifts, that would be counterintuitive', he said following an event at the Bruegel think tank in Brussels...

Dialog Semiconductor Ltd v HMRC [2025] UKFTT 1188 (TC) The appellant sought to purchase Atmel, a US microchip manufacturer, and the parties signed a merger agreement. Under that deal, Atmel was barred from inviting competing bids; however, where an unsolicited superior proposal arose, it could terminate by paying a US$137m termination fee, subject to the appellant’s right to match. In due course, a better bid materialised and Atmel ended the agreement and paid the fee. Following an enquiry, HMRC issued a closure notice assessing the fee to corporation tax as a chargeable gain under section 22 of the Taxation of Chargeable Gains Act 1992 (TCGA 1992), on the basis it was a capital sum derived from an asset. The notice was appealed. It was agreed in advance of the hearing that the FTT would address only whether the fee came within s 22(1)(c) as a capital sum ‘received in return for forfeiture or surrender of rights, or for refraining from exercising rights’. HMRC maintained that, if the FTT found...

A D Bly Groundworks and Civil Engineering Ltd and another v Revenue and Customs Commissioners [2025] EWCA Civ 1443 What are the practical implications of this case? The CA confirmed that the proper way to decide if expenditure is incurred wholly and exclusively for the purposes of the trade is to apply established authorities. The principles are as follows. Because the taxpayer’s “object” in making the outlay must be identified, it follows that—save in plain cases—the First-tier Tribunal (FTT) should examine the taxpayer’s state of mind at the time the cost is incurred (Lord Brightman in Mallalieu v Drummond (Inspector of Taxes) [1983] 2 All ER 1095 at 1100, [1983] STC 665 at 669, [1983] 2 AC 861 at 870 (Mallalieu)). In conducting that inquiry, the object of the spending must be kept separate from its effects. Where the sole object was to advance the business, the expense is deductible even if it inevitably carries other consequences. Accordingly, the presence, for example, of a private...

SME R&D relief—additional deduction (pre-1 April 2024) This Practice Note addresses the principal research and development (R&D) relief for small or medium-sized enterprises (SMEs) for accounting periods beginning before 1 April 2024, subject to transitional provisions. For further detail, see Practice Note: SME R&D relief—tax credit (pre-1 April 2024). For the R&D expenditure credit that applies to periods beginning before 1 April 2024, see Practice Note: R&D expenditure credit (pre-1 April 2024). In this Practice Note, these two are collectively described as the pre-1 April 2024 schemes. For guidance on the schemes of relief for R&D generally applying to accounting periods beginning on or after 1 April 2024, see Practice Notes: The merged R&D expenditure credit (post-1 April 2024) and Enhanced relief for R&D-intensive loss-making SMEs (post-1 April 2024). SME R&D relief—additional deduction Where the relevant conditions are satisfied, an SME company may claim an additional deduction equal to 186% of its qualifying research and development (R&D) expenditure when computing profits chargeable to corporation tax...

The Budget The Budget is a Parliamentary occasion where the Chancellor of the Exchequer delivers key statements on the national economy. It sets out the government’s tax intentions for the next year, and at times for later periods. Most measures due in the following tax year will already have been announced and consulted on in advance. Fresh announcements may arrive on Budget day—some, mainly anti-avoidance steps, take effect immediately. Others are scheduled to commence from a future date. The Budget also precedes the presentation of the Finance Bill to Parliament. In most years there is a single Finance Bill, though in some—such as those featuring a general election—there have been two or even three, as outlined below. Income tax and corporation tax are annual charges, so they can only be levied for a year (a tax year for income tax, or a financial year for corporation tax) where an Act of Parliament provides for them. Consequently, the government’s power to charge...

If a company undertakes a share buyback itself, or via an intermediary acting as the company’s agent, the usual tax position for a UK-resident shareholder is that the transaction is regarded, for UK tax purposes at the time of repurchase, as both: a disposal of their shares for chargeable gains purposes, and the receipt of an income distribution Beyond that, the precise treatment differs slightly according to whether the shareholder is an individual or a corporate owner. For further detail on these differences, see Practice Notes: Tax consequences of share buybacks—main rules and Tax consequences of share buybacks—calculating the income capital split. However, special provisions can apply to repurchases by certain unquoted companies. These rules can prevent any of the consideration from being treated as a distribution in the hands of a particular UK-resident shareholder. Under those provisions, the whole sum received by that shareholder is treated as disposal proceeds for CGT/corporation tax on chargeable gains purposes. The comparative advantages of this—ie...

[ Team Leader ] [ insert HMRC address ] [ insert date ] Application seeking advance clearance under section 1091 of the Corporation Tax Act 2010 [and sections 138 and 139(5) of the Taxation of Chargeable Gains Act 1992] 1 Introduction We act on behalf of [ insert name of the target company ] (Company A) [ and for the shareholders of Company A ]. Company A qualifies as the ‘distributing company’ for the purposes of section 1079 of the Corporation Tax Act 2010 (CTA 2010). [ In connection with the proposed arrangements outlined in this letter, we request confirmation under CTA 2010, s 1091 that the distribution described herein will be treated as an exempt distribution within the meaning of CTA 2010, s 1075 ]...

[ Team Leader ][ insert HMRC address ][ insert date ] Application seeking advance clearances under [section[s] 138[ and 139(5)] Taxation of Chargeable Gains Act 1992][ and ][section 701 Income Tax Act 2007[ and section 748 Corporation Tax Act 2010]] 1 Introduction 1.1 We represent [ insert name of the target company ] ( Company A ) [ and also the shareholders of Company A ]. This letter relates to the proposed steps outlined below (the Transactions) and requests confirmation under: 1.1.1 [ section 138 Taxation of Chargeable Gains Act 1992 ( TCGA 1992 ) that section 137 TCGA 1992 will not be applicable; ] 1.1.2 [ section 139(5) TCGA 1992 that that subsection is not to apply; ] 1.1.3 [ section 701 Income Tax Act 2007 ( ITA 2007 ) that a counteraction notice should not be issued under section 698 ITA 2007; and ] 1.1.4 [ section 748 Corporation Tax Act 2010 ( CTA 2010 ) that a counteraction...