Tax enquiry meaning

Sword Services Ltd and others v Revenue and Customs Commissioners What was this case about? The taxpayers brought a judicial review to contest payment notices (PPNs) issued by HMRC to members (ie partners) of several film production partnerships, seeking to have those notices quashed. PPNs are a form of accelerated payment notice (APN) given to partnership members. As with an APN, a PPN requires tax to be paid upfront while HMRC’s enquiries into the relevant arrangements are concluded. For more on the accelerated payments regime, see Practice Note: Accelerated payment notices. The taxpayers argued that the PPNs were unlawful on two bases: They were issued to members of a limited liability partnership (LLP), but schedule 32 to the FA 2014 (the PPN legislation) does not, in the taxpayers’ view, authorise HMRC to issue PPNs to LLP members; it applies only to other forms of partnership, such as general or limited partnerships. Condition A, one of the statutory requirements that must be met before...

Putney Power Ltd and another v Revenue and Customs Commissioners [2026] UKUT 105 (TCC) What are the practical implications of the case? This ruling confirms there is no definitive legal ‘test’ for pinpointing when a trade starts for EIS relief. The question set by statute is when a given taxpayer began carrying on its own trade, answered through a multi-factorial enquiry into the particular facts before the court, applying the legislation’s ordinary language. The judgment clarifies the proper approach whenever a statute calls for a multi-factorial assessment, with ramifications that extend far beyond the EIS sphere. It underscores that the enquiry is fact-sensitive, turns on the totality of the circumstances, and is steered by the legislation’s words, not any rigid checklist or bright-line rule. In undertaking such an exercise, the FTT may take account of relevant factors noted in earlier cases, but those points must not be treated as glosses on the statutory wording in issue. Further, when weighing the facts, the FTT should distinguish between decisions of...

In this issue: Companies and corporation tax Employment taxes Taxes management and litigation International Individuals Daily and weekly news alerts New and updated content Dates for your diary Trackers Useful information Companies and corporation tax Court of Appeal holds that payments in settlement of regulatory breaches were tax deductible (ScottishPower v HMRC) As noted in Tax weekly highlights—23 January 2025, the Court of Appeal has concluded that consumer redress paid by ScottishPower to resolve regulatory investigations is deductible for corporation tax, reversing the outcomes reached by both the First-tier Tax Tribunal (FTT) and the Upper Tribunal (UT). On the facts, the Court determined these sums were not fines or penalties and so the rule in McKnight (HM Inspector of Taxes) v Sheppard, which renders fines and penalties non-deductible, did not apply. The Court also dismissed the presence of any broader principle, in this context, that a payment must follow the tax treatment of...

R&D expenditure credit (pre-1 April 2024) This Practice Note outlines the R&D expenditure credit (RDEC) regime that applies to accounting periods starting before 1 April 2024, subject to transitional provisions. For details of the primary research and development relief available to small or medium-sized enterprises (SMEs) for periods beginning before 1 April 2024, see Practice Notes: SME R&D relief—additional deduction (pre-1 April 2024) and SME R&D relief—tax credit (pre-1 April 2024). Collectively, in this Practice Note, these two arrangements effective before 1 April 2024 are called the pre-1 April 2024 schemes. For guidance on the reliefs that generally apply to accounting periods commencing on or after 1 April 2024, see Practice Notes: The merged R&D expenditure credit (post-1 April 2024) and Enhanced relief for loss-making R&D-intensive SMEs (post-1 April 2024). What is the pre-1 April 2024 R&D expenditure credit? Refer to the Practice Notes mentioned for the relevant guidance...

This Practice Note sets out the following areas: legislation governing CSOPs—self-certification, registration and filing requirements the HMRC approval process up to 6 April 2014 the self-certification and registration regime since 6 April 2014 self-certification—notice and timing signing up for the self-certification regime HMRC power to enquire into a CSOP outcome of an HMRC enquiry HMRC general power to require information annual return filing requirements common ERS annual return errors penalties and appeals, and amending annual returns For broader information on company share option plans (CSOPs), refer to Practice Note: How CSOPs work and key features. Legislation governing CSOPs—self-certification, registration and filing requirements The provisions governing CSOP self-certification, registration and filing are set out in paragraphs 28A–28K of Schedule 4, Part 7, and paragraph 33 of Schedule 4, Part 8 to the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003). HMRC approval process up to 6 April 2014 Before...

On 17 July 2014, the Finance Act 2014 (FA 2014) brought in the mechanism of a follower notice. The aim is for follower notices to be used against taxpayers who have entered into a tax avoidance arrangement that has been found to fail in another party’s litigation. Under this regime, a follower notice can be given where there is a final, relevant judicial decision that is not appealable or the time to appeal has expired (including decisions of the First-tier Tax Tribunal (FTT)), and the reasoning in that decision would negate the tax benefit claimed by the taxpayer. Where there is an open HMRC enquiry into the taxpayer’s return (or claim) or the taxpayer has lodged an appeal (and that appeal remains live), HMRC may issue a follower notice requiring the taxpayer to amend their return (or claim) or withdraw their appeal to align with the earlier decision, failing which a penalty will arise. As a result, if a follower notice is served on a taxpayer, the taxpayer faces a...

1 Introduction 1.1 We operate procedures requiring colleagues to escalate any awareness or suspicion of money laundering, terrorist financing, fraud, bribery, corruption, sanctions breaches, tax evasion, etc to [ insert, eg the nominated officer ] (see section 3 for further detail). In defined circumstances they must then notify the National Crime Agency (NCA) by submitting a suspicious activity report (SAR) or, depending on the nature of the report, to another agency via the appropriate channels. 1.2 The NCA assigns those SARs to specialist financial crime investigation officers for further enquiry. Intelligence from SARs may then be shared by the NCA with other law enforcement or government agencies (LEAs), which may require additional information. This is a financial crime investigation. 1.3 Where further information is needed from us following a SAR, it will typically be obtained through enforcement action (most often a production order) by an LEA. 1.4 This document outlines our internal procedure for dealing with financial crime investigations and enforcement actions. It sets...

We proceed on the basis that the company is UK-resident and that the dividend is not being made between companies within the same group for tax purposes. When analysing the tax consequences for the distributing company, the initial enquiry is to determine whether the transaction sits within the statutory rules on loan relationships or, alternatively, within the corporation tax provisions dealing with chargeable gains. In the ordinary course, a loan note held by a company is regarded, for tax purposes, as a loan relationship, and is treated in line with that classification...