Legal News

In this issue: International Reorganisations, restructuring and insolvency VAT Taxes management and litigation Anti-avoidance Energy and environment Key developments Employment taxes Daily and weekly news alerts New and updated content Dates for your diary Trackers Useful information International UK government announces mandatory application of the foreign permanent establishment exemption On 21 May 2026, the government released a policy paper outlining reforms to the taxation of UK-resident companies operating partly through foreign permanent establishments ( PEs), making the foreign PE exemption compulsory for most businesses for accounting periods starting on or after 1 January 2027. For UK-resident companies with foreign PEs involved in activities relating to the exploration or exploitation of oil and gas, the measure will take effect from 1 September 2026. This is achieved by deeming those companies’ accounting periods to end on 31...

In this issue: Companies and corporation tax Employment taxes Taxes management and litigation International Energy Daily and weekly news alerts New and updated content Dates for your diary Trackers Useful information Companies and corporation tax Supreme Court decides that expenditure on environmental surveys and studies for windfarms was not incurred ‘on’ the provision of plant for capital allowances purposes ( HMRC v Orsted West of Dutton Sands ( UK) Limited) In Orsted West of Dutton Sands ( UK) Limited [2026] UKSC 12, the Supreme Court, unanimously, upheld HMRC’s appeal, finding that spending on environmental surveys and studies carried out for the development of offshore windfarms does not attract capital allowances. The Court held the expenditure was not incurred ‘on’ the provision of plant, as that phrase in section 11(4) of the Capital Allowances Act 2001 ( CAA 2001)...

CATS North Sea Ltd ( CNSL) should not bear the uplift because it was not a deemed participant in the field where it continued a related company’s transport operations, and statutes bar transferring the incumbent’s oil business for tax purposes, the UT ruled. It also decided that the company’s participation status dictated the legal characterisation of the activities, even if, in practice, they were largely identical. The dispute concerned the interplay between several corporation tax provisions for oil businesses and a balancing charge, being an amount that HM Revenue and Customs ( HMRC) adds to taxable profits when an asset is realised for more than its allocated value. HMRC applied its preferred balancing charge after a reorganisation under which CNSL, formerly a wholly owned subsidiary of Amoco Exploration Co LLC part of BP Plc, assumed Amoco’s interest in the Central Area...

Bilfinger Salamis UK Limited v HMRC [2026] UKUT 143 ( TCC) BUK delivered services to a North Sea oil platform operator ( M) using its own staff. The arrangement was later reworked into an offshore employment model designed to avoid secondary Class 1 National Insurance contributions, namely employers’ NICs. The core group of BUK employees was transferred to a Guernsey subsidiary, Bilfinger Guernsey ( BG), and BG then supplied the labour for M’s benefit. BUK nevertheless remained the contracting party with M, and there was no contract in place between M and BG. Separately, BG contracted with BUK to provide labour, scaffold and equipment. The core team of BG employees operated on M’s oil platforms in discharging BUK’s contractual obligations to M (see UT at [6], [7] and [31], the latter referring to FTT at [218]). The issue before both the FTT and the UT was...

The agreement Cleared by the Council of EU Member States, the deal centres on keeping the frontier between Gibraltar and Spain fully open and unobstructed, while protecting the integrity of the EU single market and its customs union framework. Gibraltar, on Spain’s southern coastline, runs its own domestic affairs, with foreign policy and defence retained by the UK. Although Spain continues to press a sovereignty claim over Gibraltar, Gibraltar’s close relationship with Britain meant it left the EU following the Brexit referendum. Yet most people in Gibraltar did not favour departing the EU. A transaction tax on goods made in, or brought into, Gibraltar will begin at 15%, then move to 16% in the second year and 17% in the third year, respectively......

In this edition: Energy and environment Employment taxes Companies and corporation tax Daily and weekly news alerts New and updated content Dates for your diary Trackers Useful information Energy and environment UT holds separate oil ring fence trade must be considered when applying transfer of trade rules ( CATS North Sea Ltd v HMRC) As outlined below, in CATS North Sea Ltd [2026] UKUT 142 ( TCC), the Upper Tribunal ( UT) allowed the taxpayer’s appeal, overturning and remaking the FTT’s decision ([2024] UKFTT 512 ( TC)). The matter involved a hive-down within the BP plc group of an interest in a North Sea oil and gas pipeline. For the transferor, the pipeline operations sat wholly within the ring fence ( IRF), whereas for the taxpayer (the wholly owned transferee) they were only partly so. The UT determined that section 279 of the Corporation Tax Act 2010 ( CTA 2010), which deems...

Original news Mr L on behalf of the estate of Mr O ( CAS-89142- L1R8)—18 November 2025 Summary The Pensions Ombudsman dismissed a complaint concerning recovery of a winding-up lump sum. The complainant had agreed to the offer of a winding-up lump sum, but died before payment was made. The estate was required to return the amount because, under the Finance Act 2004 ( FA 2004), a winding-up lump sum is payable only to a member and no defences to repayment were available. The matter underscores the need for pension schemes to carry out regular, ongoing mortality screening. What were the facts? Mr O was a member of the Old British Steel Pension Scheme (the Scheme). Mr O passed away and was represented by his executor, Mr L......

In this issue: VAT International Key developments Individuals and income tax Taxes management and litigation Finance Employment taxes Companies and corporation tax Energy and environment Indirect taxes—gambling and insurance premium tax ( IPT) Lex Talk®Tax: a Lexis®Nexis community Daily and weekly news alerts New and updated content Dates for your diary Trackers Useful information VAT Court of Appeal holds that government funding of educational courses constituted consideration for supplies of services for VAT purposes ( HMRC v Colchester Institute Corporation) As outlined below, in HMRC v Colchester Institute Corporation [2026] EWCA Civ 363, the Court of Appeal determined that government funding paid to Colchester Institute Corporation ( CIC) for the delivery of free courses amounted to third‑party consideration for those supplies. The court concluded that both the language of the...

HMRC v Boehringer Ingelheim Limited [2026] UKUT 135 ( TCC) Boehringer Ingelheim Ltd ( BIL) supplied pharmaceutical products at the standard rate to the Department of Health and Social Care ( DHSC), retail pharmacies and, predominantly, wholesale distributors. Most of those supplies were to wholesalers and were in the main ultimately used by the NHS. In line with government arrangements concerning medicines used by the NHS, BIL made payments to the DHSC. BIL maintained that each and every payment effectively reduced the consideration it obtained and therefore amounted to a rebate for VAT purposes. HMRC, however, contended that none of the payments constituted a VAT rebate for VAT purposes. The UT disagreed with both BIL and HMRC. HMRC’s principal contention was that BIL’s payments to the DHSC were not price reductions but charges on overall revenues, akin to a...

Background to the consultation The UTT regime was launched in 2022 with the purpose of reducing the ‘legal interpretation’ share of the ‘tax gap’, meaning instances where the customer and HMRC interpret the law, and its application to the facts in a given case, differently so a different tax outcome arises, without any avoidance. Under the current rules, companies and partnerships with turnover above £200m or a balance sheet total exceeding £2bn must notify HMRC when a ‘tax advantage’—the difference between the taxpayer’s interpretation and HMRC’s—exceeds £5m and one or both of the following conditions are met: the business has taken a stance that conflicts with HMRC’s known position, as set out in published guidance or through direct dealings with HMRC the business has included a provision in its accounts to reflect the likelihood that an alternative tax treatment will be applied to a...

HMRC v Colchester Institute Corporation [2026] EWCA Civ 363 The dispute centred on sums provided by government to CIC, an eligible body for the purposes of Item 1, Group 6 of Schedule 9 to the Value Added Tax Act 1994 ( VATA 1994), to enable free courses for students. CIC maintained that this funding constituted third‑party consideration for exempt supplies of education and vocational training made available without charge. HMRC, by contrast, argued the payments merely underwrote a non‑business activity. The core issue between the parties was whether a sufficiently direct link could be shown between the funding and the courses......

R (on the application of Rokos) v HMRC [2026] EWHC 733 ( Admin) The taxpayer joined partnerships to avoid income tax by offsetting his shares of their losses against other income. He ultimately accepted he had no entitlement to loss relief in principle, yet contended HMRC could not refuse relief because it had not properly examined the partnerships’ returns and was now out of time. On that footing, he said HMRC’s amendments to his returns lacked lawful basis and were open to judicial review. Under the Taxes Management Act 1970: An HMRC officer may enquire into a partnership return by giving notice of that intention to the partner who made and delivered the return, or that partner’s successor, within 12 months of delivery where the return was on time: Section 12AC TMA 1970. When the enquiry ends, the officer issues a closure notice stating...

In this issue: Fiscal events Companies and corporation tax Individuals and income tax Taxes management and litigation Real estate tax Scotland Wales Capital gains tax VAT Daily and weekly news alerts New and updated content Dates for your diary Trackers Useful information Fiscal events National Insurance Contributions ( Employer Pensions Contributions) Bill awaiting Royal Assent after House of Lords withdraws amendments On 25 March 2026, the House of Lords pulled back its amendments to the National Insurance Contributions ( Employer Pensions Contributions) Bill after rejection by the House of Commons. The Bill now awaits Royal Assent. See: LNB News 24/03/2026 39. Companies and corporation tax HMRC opens consultation on reporting close company payments to participators HMRC has launched a consultation proposing new obligations to report dealings between close companies and their...

J Hosking v HMRC [2026] UKFTT 406 ( TC) This case concerned an appeal against HMRC’s determination assessing the appellant to IHT under IHTA 1984, s 222, for IHT purposes, arising from gifts of roughly £1.7m made over 2011–2016 to pro‑ Brexit bodies outside the party system. He argued that the sums were exempt transfers: either as normal expenditure out of income under IHTA 1984, s 21, or as political donations within IHTA 1984, s 24, interpreted so as to align with the European Convention on Human Rights ( EHCR). The FTT dismissed both grounds. Relying on Bennett v IRC [1995] STC 54, the tribunal concluded that ‘normal expenditure’ demands a settled pattern, evidenced by periodic payments or an antecedent commitment dictating future outgoings. On the evidence, there was no demonstrable commitment and no discernible pattern in the giving overall......

UT overturns case management directions relating to witness evidence ( L Rowland & Co ( Retail) Ltd v HMRC) L Rowland & Co ( Retail) Ltd v HMRC [2026] UKUT 130 ( TCC). The substantive appeal concerns whether approximately 1,400 locum pharmacists engaged by the taxpayer were self-employed or employees for PAYE and NICs. The taxpayer maintains the locums were self-employed, while HMRC contends they were employees. The taxpayer declined to permit HMRC access to the locums as witnesses and indicated it would seek judicial review of any approach by HMRC. In case management, the FTT directed the identification of ten further locums as witnesses of fact to give evidence in the appeal, noting the taxpayer had produced only two locum witness statements. The directions further contemplated that, if the taxpayer did not call those witnesses voluntarily, the FTT itself could issue witness...

UT overturns case management directions relating to witness evidence ( L Rowland & Co ( Retail) Ltd v HMRC) L Rowland & Co ( Retail) Ltd v HMRC [2026] UKUT 130 ( TCC) The substantive appeal centres on whether roughly 1,400 locum pharmacists engaged by the taxpayer were self-employed or employees for PAYE and NICs purposes, with the taxpayer maintaining that the locums were self-employed and HMRC asserting that they were employees. The taxpayer refused HMRC access to the locums as witnesses and indicated it would seek judicial review of any approach made to them by HMRC. In case management, the FTT issued directions requiring the identification of ten further locums as witnesses of fact whose evidence could be relied upon at the substantive hearing, as the taxpayer had produced only two locum witness statements. If the taxpayer chose not to call these...

HMRC v Brzezicki [2026] UKUT 125 ( TCC) The taxpayer acquired a dwelling with six acres of land in total. Two acres ran alongside the River Meon and were cut off from the remainder by an artificially engineered carrier stream used to support the breeding of wild brown trout. Access over the water was by two modest timber foot bridges. He bought the property intending to launch a commercial fly‑fishing enterprise, which he proceeded to establish in the months immediately after completion. An amended SDLT return was then submitted applying the non‑residential bands on the footing that the property was of mixed use. HMRC subsequently issued a closure notice asserting the holding was residential, prompting an appeal. The FTT ultimately upheld that appeal, deciding that the two‑acre ‘island’ and the stream did not form part of the house’s garden or grounds. The UT,...

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...

Countrywide Partners Ltd v HMRC [2026] UKFTT 357 ( TC) HMRC served the appellant with a stop notice over a contractor loan arrangement for which it had been tagged as the promoter and given a scheme reference number. Despite the notice, the appellant continued to produce payslips, process salary and loan disbursements, and file RTI returns for users of the scheme. HMRC determined these steps amounted to the ongoing organisation and management of arrangements, and levied a £1m penalty under FA 2014, Sch 35, being £100,000 plus £5,000 in respect of each of 180 users......

Muller UK and Ireland Group LLP and others v HMRC [2026] EWCA Civ 248 The second, third and fourth appellants (the Corporate Members) were part of the Muller multinational corporate group trading in dairy products. In 2013, those appellants moved their respective trades and assets, including intellectual property and goodwill, to the fourth appellant, Muller UK and Ireland Group LLP ( LLP), receiving membership units in the LLP in exchange. The LLP recorded amortisation of the assets and goodwill (the Material Assets) in its accounts on a straight-line basis over five years. When calculating their taxable profits from the LLP for the 2013–18 accounting periods, the Corporate Members claimed deductions for that amortisation under Part 8 of the Corporation Tax Act 2009 ( CTA 2009). HMRC rejected the claims on the footing that the Material Assets did not satisfy the Part 8...