Legal News

Nellsar Ltd v HMRC [2025] UKUT 164 ( TCC) Nellsar had purchased five care homes as going concerns. On each transaction, its financial statements apportioned the consideration between goodwill and the freehold estate by reference to DRC, with a modest allocation to fixtures and fittings, which was uncontroversial. As amounts booked as goodwill in GAAP-compliant accounts attract amortisation relief for corporation tax, Nellsar benefited from attributing a larger slice to goodwill, and the disagreement therefore turned on the proper accounting treatment, for corporation tax purposes, of goodwill arising on these acquisitions. Upholding the FTT’s approach, which placed a greater proportion of the price on the properties and consequently reduced the goodwill, the UT stated that there was ample evidence supporting the FTT’s conclusions—namely, that GAAP, and in particular FRS 7.9(a), mandated use of the market value of the care home properties rather than their DRC. The UT...

Scatola and others v HMRC [2025] UKUT 156 ( TCC) The appeals serve as lead cases brought by three unrelated pairs of taxpayers, each of whom adopted a marketed SDLT avoidance scheme designed to eliminate SDLT on buying a dwelling, akin to the arrangements examined and rejected in Project Blue [2018] UKSC 30. The planning comprised a sub-sale to V Ltd, a Guernsey special purpose vehicle, followed by the grant back to the taxpayers of a 999-year lease. Three SDLT returns were submitted: return A, covering the taxpayers’ acquisition of the freehold, showed no SDLT as sub-sale relief was claimed return B, filed by V Ltd for its freehold purchase, reported no SDLT via Finance Act 2003 section 71A relief (alternative property finance) return C, concerning the taxpayers’ lease acquisition, again showed no SDLT, relying on FA 2003, s 71A HMRC then commenced an enquiry into the...

In this issue: Companies and corporation tax Individuals and income tax Stamp and transfer taxes Taxes management and litigation International Employment taxes Lex Talk®Tax: a Lexis®Nexis community Daily and weekly news alerts New and updated content Dates for your diary Trackers Useful information Companies and corporation tax UT upholds FTT decision on valuation and allocation of consideration in acquisition of care homes ( Nellsar v HMRC) In Nellsar Ltd [2025] UKUT 164 ( TCC), the Upper Tribunal rejected both appeals, affirming the FTT’s finding that Nellsar’s accounts did not comply with GAAP for corporation tax relief on goodwill amortisation. Nellsar purchased five care homes as going concerns and assigned substantial elements of the price to goodwill, valuing the properties using depreciated replacement cost ( DRC). The FTT decided that, under UK GAAP, the correct basis was...

Eyre and others v HMRC [2025] UKFTT 566 ( TC) The case concerned the disposal of shares in Phoenix Spencer Sandbanks Ltd ( PSSL), a vehicle that had purchased a mixed‑use site in Poole and was proactively pursuing planning permission for its redevelopment. The appellants, serving as both directors and shareholders, then sought entrepreneurs’ relief under Chapter 3, Part 5 of the Taxation of Chargeable Gains Act 1992 ( TCGA 1992), contending the share sales amounted to ‘qualifying business disposals’. The FTT concluded that, in the critical and relevant one‑year window before the disposals, PSSL was not in fact conducting a trade at the time in question......

Eyre and others v HMRC [2025] UKFTT 566 ( TC) At issue were disposals of shares in Phoenix Spencer Sandbanks Ltd ( PSSL), a company that had purchased a mixed‑use property in Poole and was pursuing planning consent for its redevelopment. The appellants, both directors and shareholders, applied for entrepreneurs’ relief under Chapter 3, Part 5 of the Taxation of Chargeable Gains Act 1992 ( TCGA 1992), contending the sales were ‘qualifying business disposals’. The First‑tier Tribunal determined that, during the relevant one‑year period preceding the disposals, PSSL was not carrying on a trade. Over that timeframe the company’s income consisted solely of rent derived from the property, which it held as an investment asset, not trading stock......

In this issue: Anti-avoidance Stamp and transfer taxes VAT Individuals and income tax International Employment taxes Taxes management and litigation Individuals and income tax Daily and weekly news alerts New and updated content Dates for your diary Trackers Useful information Anti-avoidance HMRC updates DOTAS guidance On 14 May 2025, HMRC released refreshed guidance on the disclosure of tax avoidance schemes ( DOTAS). Several parts have been revised to take account of conclusions reached in recently determined tribunal cases. HMRC also notes changes to improve clarity around the obligations of promoters and suppliers, highlighted in section 14.2 of the guidance. Section 14.2 sets out a supplier’s duty, in relation to relevant or proposed arrangements, to notify clients of the reference number allocated by HMRC after a notice is issued under section 310D of the...

Moran v HMRC [2025] UKFTT 540 ( TC) For many years, the taxpayer lived in a UK home because of intricate and opaque structures arranged by her deceased husband. He purchased the property and later transferred it to a Jersey‑resident company, N Ltd, which he had set up. N Ltd was owned by a Jersey discretionary trust he had also created, the C trust. A further Jersey company, W Ltd, was owned by another Jersey discretionary trust settled by Mr Moran, the B trust. The continuing expenses of the property were covered by loans made by W Ltd to N Ltd. After her husband’s death, the taxpayer ostensibly lived in the property under a licence to occupy. HMRC issued assessments on the taxpayer under the TOAA rules for eight years. Under those rules, income would be treated as arising where a...

Zzaman v HMRC [2025] UKFTT 539 ( TC) Mr Zzaman appealed a discovery assessment concerning the HICBC for 2018–19. He was not in self-assessment. His adjusted net income was above the £50,000 HICBC limit and he was receiving child benefit. In April 2021, an HMRC officer identified a tax shortfall for 2018–19. In January 2023, a different HMRC office issued a discovery assessment for £2,501. His grounds of appeal were: that the retrospective provision in section 97 of the Finance Act 2022 ( FA 2022) was unfair and did not apply to him; the stance in HMRC v Jason Wilkes [2021] UKUT 150 ( TCC) should be adopted that working out adjusted net income is particularly challenging for a PAYE employee with fluctuating pay that HMRC already held all relevant information and ought to have informed him of any additional...

In this issue: VAT Anti-avoidance Employment taxes Taxes management and litigation Finance Daily and weekly news alerts Dates for your diary Trackers New and updated content Useful information VAT Court of Appeal—facilitators of VAT fraud can be deregistered even if they make legitimate taxable supplies ( Impact Contracting Solutions Limited v HMRC) In Impact Contracting Solutions Ltd [2025] EWCA Civ 623, the Court of Appeal affirmed the Upper Tribunal’s finding that HMRC is entitled to cancel a person’s VAT registration for reasons tied to tax fraud, even where that person also makes bona fide taxable supplies, so long as deregistration is a proportionate response on the facts. See News Analysis: Court of Appeal—facilitators of VAT fraud can be deregistered even if they make legitimate taxable supplies ( Impact Contracting Solutions Limited v...

Impact Contracting Solutions Ltd v HMRC [2025] EWCA Civ 623 This important case considers the ambit of HMRC’s power to cancel a taxpayer’s VAT registration where that registration is used solely or principally to enable fraud, and the taxpayer knew, or had the means to know, of such fraud, in line with the Ablessio principle as understood. The taxpayer, ICS, worked with mini‑umbrella companies to source labour and then supplied that labour to its customers, which were temporary work agencies at the time. HMRC regarded the arrangements between ICS and its customers as contrived and as having the result that those customers did not properly account for VAT. HMRC invoked the Ablessio principle to deregister ICS, on the basis that its VAT registration was being used to facilitate fraud. Because both HMRC’s decision to deregister ICS and ICS’s appeal against that decision took place before 31...

Powell v HMRC [2025] UKFTT 528 ( TC) The taxpayer served as director and sole shareholder of T Ltd, a close company, and his director’s loan account with the company was overdrawn, giving rise to a charge on the company under section 455 of the Corporation Tax Act 2010 ( CTA 2010). In 2020, after a share‑for‑share exchange, T Ltd became a subsidiary of PHSW Ltd, where the taxpayer was also a director at the time. The taxpayer, T Ltd and PHSW Ltd then executed a novation of the outstanding loan account so that T Ltd’s rights were assigned to PHSW Ltd instead. T Ltd released the taxpayer from his obligations to it and PHSW Ltd acquired those rights, thereby becoming the taxpayer’s creditor in his place. The tax paid by T Ltd under CTA 2010, s 455 in respect of the loan was...

HMRC v Industria Umbrella Ltd ( In liquidation) [2025] UKFTT 494 ( TC) HMRC contended that Industria Umbrella promoted contractor loan arrangements intended to allow contractors to obtain the bulk of their gross contract fees as purported loans, with only a modest slice treated as salary processed through PAYE. Under these arrangements, each worker received an employment contract issued at the same time as a loan agreement. The employment terms specified a basic rate roughly aligned with the National Minimum Wage, whilst the loan documentation enabled payment of the balance of the contract value in a form that was not immediately subject to income tax or National Insurance contributions ( NICs). The paired documents operated together to channel remuneration as a loan rather than earnings. In substance, the structure was designed to elevate contractors’ net pay to around 80% of the gross contract value by...

Paul Baxendale- Walker HMRC cautioned that Paul Baxendale- Walker may incur civil fines or face criminal charges if he fails to cease promoting the arrangements. The avoidance arrangements involved offshore trusts intended to secure tax reliefs absent any bona fide commercial aim. According to HMRC, the schemes he marketed employ intricate frameworks to keep funds accessible to participants while purporting to sidestep tax liabilities. Records from the Solicitors Regulation Authority show Baxendale- Walker was removed from the roll in September 2006. The regulator did not state why the step was taken. Since then, he has worked as a chat show presenter and as an actor and producer in the adult entertainment sector. The government signalled in November 2023, as previously noted by HMRC......

A tribunal on 16 May 2025 confirmed that the NCA’s belief that Mohammed Butt and Mahfooz Begum obtained their income through money laundering stands as correct, and it upheld an earlier court’s decision. The authority said it had sufficient proof drawn from the couple’s lifestyle choices set against their publicly declared earnings. Butt was detained in 2012 on suspicion of money laundering linked to an organised crime group, the ruling noted. He was not charged because there was insufficient evidence, the tribunal added. By contrast, two of his brothers, as well as his two sons, were prosecuted and found guilty of money laundering and drug trafficking offences, according to the judgment......

FTT determines VAT zero-rating did not apply to construction of mental health unit ( NHS Ayrshire & Arran Health Board v HMRC) NHS Ayrshire & Arran Health Board v HMRC [2025] UKFTT 502 ( TC). The NHS Board requested non‑statutory clearance that zero‑rating would apply to the construction services and to the materials used in creating a ‘bedroom wing’ for the National Secure Adolescent Inpatient Service ( NSAIS), a secure mental health unit, within the grounds of a hospital......

In this issue: Companies and corporation tax Taxes management and litigation Tax update spring 2025 Employment taxes Capital gains Daily and weekly news alerts New and updated content Dates for your diary Trackers Useful information Companies and corporation tax HMRC issues guidance on new cryptoasset reporting rules HMRC has released fresh guidance on the Cryptoasset Reporting Framework ( CARF), setting out duties to gather and disclose user information. From 1 January 2026, UK-based reporting cryptoasset service providers ( RCASPs) must compile and submit details of user transactions to HMRC, in line with CARF obligations. Starting data gathering sooner is advised to remain compliant with the incoming rules. HMRC will issue further guidance updates in due course as matters progress accordingly. This stems from a consultation opened at Spring Budget 2024 on the UK’s approach to...

Morgan Lloyd Trustees Ltd v Revenue and Customs Commissioners [2025] UKUT 00102 ( TCC) What are the practical implications of this case? This appeal underlines that, notwithstanding a legal error identified by the UT—here, the FTT’s misdirection about the proper test for identifying the contract’s ‘commercial context’—the UT retains a choice as to whether the decision should be overturned. Against that backdrop, the UT’s treatment of how the relevant agreements ought to be construed, and its assessment of the findings of fact made by the FTT (valuation material included), is noteworthy. Accordingly, the UT focused on the words actually used and on the FTT’s recorded findings, rather than substituting a broader commercial gloss. That emphasis shaped the result reached in Formwise in practice. In relation to Formwise, despite the FTT’s decision being tainted by an error of law, the UT determined that the parties were to be...

FTT determines discovery assessment invalid in relation to R& D relief claim ( Realbuzz Group Ltd v HMRC) Realbuzz Group Ltd v HMRC [2025] UKFTT 493 ( TC) The company submitted an amended return for the accounting period ending 30 April 2020 that included a claim for R& D relief, supported by an R& D report spanning multiple projects. Its return for the year to 30 April 2021 likewise featured an R& D relief claim. HMRC opened an enquiry into the 2021 return and, in 2023, issued a closure notice rejecting that claim. It also raised an assessment for 2020 on the basis that some of the 2021 projects had commenced in 2019, which meant the 2020 return would have contained errors. It was accepted that the 2020 claim was excessive and that HMRC had made a discovery. The sole point for the FTT was the...

What are the key proposals for replacing stamp duty and SDRT with a single, self-assessed, tax on securities? The core government proposal is to replace the existing split between stamp duty on paper instruments and SDRT on electronic transfers with a compulsory, single, self-assessed tax on securities. Crucially, the present framework is complicated by the fact that SDRT is not confined to electronic movements; as a result, there is a relatively intricate interplay between SDRT and stamp duty where paper transfers are concerned. By contrast, a single charge would apply uniformly to securities transactions, removing that interaction and the related ambiguity seen under the dual system. From a practical standpoint, a persistent problem with the stamp duty rules—originating at least as far back as the Stamp Act 1891, which still has effect—is the delay imposed on company registrars. After a share transfer, they must wait for a...

In this issue: Companies and corporation tax Employment taxes Taxes management and litigation VAT and indirect taxes Daily and weekly news alerts Updated content Dates for your diary Trackers Useful information Companies and corporation tax Court of Appeal finds that distributions debited to company's share premium account were dividends that were not capital in nature ( Beard v HMRC) In Beard v HMRC [2025] EWCA Civ 385, the Court of Appeal upheld the FTT and UT’s conclusions that payments the taxpayer received from an overseas company, posted as debits to its share premium account, constituted dividends. They were not capital in character and were therefore subject to income tax. See: Court of Appeal finds that distributions debited to the company’s share premium account were dividends that were not capital in nature ( Beard v HMRC). Employment taxes HMRC updates Check Employment Status for Tax ( CEST) tool As noted in Tax update spring 2025, HMRC has updated the CEST tool. CEST...