Tax advantage meaning

This Checklist This Checklist highlights the different avenues for bringing a joint venture (JV) to a close or facilitating an exit, and the factors to weigh depending on the pathway chosen. For guidance on addressing a JV dispute, see Practice Note: Joint venture disputes—how to respond. For further detailed guidance on terminating joint ventures where a specially created or nominated joint venture company (JVC) is involved, see the following Practice Notes: Termination—corporate joint ventures Tax implications of operating and terminating a joint venture company Corporate joint venture dispute—dealing with deadlock: initial considerations Majority-minority joint venture dispute—a practical illustration Entering a JV relationship usually calls for significant planning and effort from the JV parties, who opt to work together for mutual advantage (often by sharing cost, resources and expertise). You will need to assess the full ramifications of ending or exiting the JV, including whether there are sound reasons to be prepared to see that investment lost if the JV is...

Original News Anderson v HMRC [2016] UKFTT 0565 (TC) What was the case about? In his tax return, Mr Anderson sought £3m of relief under sections 64 and 72 ITA 2007, claiming losses from trading activities labelled ‘football development’. He had put funds into the Bafana soccer academy in South Africa, created to cultivate emerging football talent and generate income through the profitable transfer of successful players. HMRC issued a discovery assessment, asserting the losses did not stem from a trade conducted on a commercial basis with a view to profit, and that the predominant purpose of the activity was to secure a tax advantage. Why did the appellant dispute the validity of the discovery assessment? The appellant’s central challenge was that there had been no ‘discovery’. At the point the assessment was raised, HMRC, he said, lacked reasonable grounds to believe Mr Anderson had been under-assessed, as it did not possess adequate information to support such a conclusion at the relevant time. In particular, the...

Pitt v HMRC [2024] UKUT 21 (TCC) Back in 1999, the taxpayer undertook steps to buy and sell loan notes treated as relevant discounted securities, and asserted an income tax loss approaching £700,000 for 1998/99. HMRC commenced an enquiry and moved to refuse that loss. It then served a follower notice, arguing that the principles and reasoning in the First-tier Tax Tribunal decision in Audley v HMRC [2022] UKFTT 222 (TC), if applied to these arrangements, would eliminate the tax advantage sought. The taxpayer declined to take corrective steps by amending his return to strip out the loss, so HMRC issued a closure notice to the same effect. HMRC also imposed a penalty in relation to the claimed position and the failure to take the specified corrective action as directed...

HMRC v Vermilion Holdings Ltd [2023] UKSC 37 Background This appeal revolved around the construction of ITEPA 2003, s 471. That provision identifies when an option to obtain securities (including company shares) is given ‘by reason of employment’ and so chargeable to income tax rather than capital gains tax. In 2006, Vermilion Holdings Ltd (Vermilion) granted Quest Advantage Ltd (Quest) an option to acquire shares in Vermilion (the 2006 Option). By late 2006, Vermilion’s performance had deteriorated. As part of a rescue funding arrangement, Vermilion and Quest agreed to vary the 2006 Option. In July 2007, they executed a fresh option agreement (the 2007 Option), under which Quest subscribed for a new class of Vermilion shares and the 2006 Option lapsed. In 2016, Quest assigned the 2007 Option to Mr Noble. Quest sought HMRC’s confirmation that the assignment fell within capital gains tax. HMRC refused, stating it was within income tax because it had been conferred on Mr Noble due to his role as a director of Quest. Quest...

FORTHCOMING CHANGE relating to UK transfer pricing: At Budget 2025, the government confirmed that it intends to move ahead with a new duty on in‑scope multinationals to submit annual information regarding cross‑border related party transactions and dealings for accounting periods starting on or after 1 January 2027. The detailed rules for the new ‘International Controlled Transactions Schedule’ (ICTS) are expected to be formally issued for technical consultation during spring 2026. A consultation on this measure ran from April through to July 2025. See News Analysis: Budget 2025—Tax analysis—International. This Practice Note reviews the UK transfer pricing rules as they apply to chargeable periods (referred to in this Practice Note for ease and convenience as ‘accounting periods’) commencing before 1 January 2026. Note that the Finance Act 2026 introduced a range of reforms to the UK’s transfer pricing regime, most of which apply for accounting periods beginning on or after 1 January 2026, subject to specified transitional provisions. For wider background on transfer pricing, see Practice Notes: Transfer pricing—what is...

The company establishing a SIP The company setting up a share incentive plan (SIP) does not need to be the same entity whose shares are allocated. However, both: the shares to be granted, and the connection between the SIP-establishing entity and the company whose shares are issued must satisfy the relevant legislative conditions. A SIP can be created either: solely for employees of the company that establishes it; or for those employees and for employees of other companies it controls (a group plan)—see Constituent companies below. In a group where the parent company’s shares are to be awarded, there are two options: the parent company may establish the SIP and extend it to the appropriate subsidiaries; or each subsidiary may establish its own SIP, provided the other statutory requirements concerning the shares under award are met—see Requirements for the shares. The advantage of each subsidiary operating its...

FORTHCOMING CHANGES : At Budget 2025, the government stated it will legislate via Finance Bill 2026 (also known as Finance (No 2) Bill 2024–26) to introduce measures targeting promoters or enablers of marketed tax avoidance. The provisions are set out in Part 6 of the Bill (as introduced on 4 December 2025) and cover: updates to the DOTAS and DASVOIT civil penalty regime so that HMRC can issue DOTAS penalties directly, rather than seeking tribunal approval; a general prohibition on promoting marketed arrangements that have no realistic prospect of success, and a prohibition on promoting arrangements specified in universal stop regulations (USRs). A breach of either prohibition would attract a range of sanctions, including publication, financial penalties and criminal prosecution; promoter action notices (PAN). A PAN would require businesses to cease providing goods or services to promoters of tax avoidance where those goods or services are used in the promotion of avoidance and the promoter is in breach of a USR or stop notice....

State Aid: The Basics Guide The Department for Business, Innovation & Skills’ July 2015 guide, State Aid: The Basics Guide, explains that state aid arises wherever public resources are used to give organisations an edge over others, potentially distorting competition and harming consumers and businesses across the EU. The concept is deliberately wide, as an “advantage” can be delivered in many ways, for example: grants loans tax breaks the use or sale of a state asset free of charge or for less than market value Public authorities, including local authorities in England and Wales, are accountable for ensuring their policies and projects comply with these requirements. During the implementation period following Brexit, state aid rules continue to apply in the UK. The annex to the Department for Education’s November 2019 publication, Securing Developer Contributions for Education, notes that unlawful state aid can occur in relation to developer contributions towards education...