Legal News

Binoy Joseph v HMRC [2025] UKFTT 116 ( TC) HMRC requested details concerning the taxpayer’s employment with Alpha Republic Ltd ( ARL) for 2020–21, suspecting the use of disguised remuneration. It considered ARL to be operating an avoidance arrangement involving workers, paying a wage pegged at the national minimum wage ( NMW) and a further amount described as ‘commission’. According to HMRC, PAYE and National Insurance contributions ( NICs) were applied only to the NMW portion of pay. Although the taxpayer was not obliged to file a self‑assessment income tax return for 2020–21, HMRC first made informal enquiries and then, on 6 November 2023, issued a ‘taxpayer notice’ (an information notice) under paragraph 1 of Schedule 36 to the Finance Act 2008 ( FA 2008). That power permits HMRC to seek information or documents reasonably required for the purpose of checking a person’s tax...

R (oao Anglia Ruskin Students’ Union) v HMRC [2025] EWHC 296 ( Admin) Supplies of catering generally bear the standard rate of VAT, as they sit outside the zero rate in Group 1 of Schedule 8 to the Value Added Tax Act 1994 ( VATA 1994), and are excluded from that relief. An exception applies where catering is supplied in close connection with an educational supply by an eligible body, in which case exemption may arise under VATA 1994, Sch 9, Group 6, Item 4. It was common ground the Union was not an eligible body for the purposes of VATA 1994, Sch 9, Group 6. The dispute concerned how the concession in paragraph 5.5 of HMRC Notice 709/1 should be construed and applied......

In this issue: Companies and corporation tax Employment taxes International Real estate tax Anti-avoidance Taxes management and litigation Daily and weekly news alerts New and updated content Dates for your diary Trackers Useful information Companies and corporation tax Supreme Court confirms Court of Appeal ruling: UK- Canada DTT conferred no UK taxing rights over the assigned payments ( Royal Bank of Canada v HMRC) As outlined below, in Royal Bank of Canada [2025] UKSC 2, the Supreme Court rejected HMRC’s appeal and agreed with the Court of Appeal that Article 6 of the UK- Canada double tax treaty ( DTT)—which grants taxing rights to the jurisdiction where the immovable property is located, in this instance an oil field—did not apply to the payments. The reason was that the right to exploit the UK oil field was held by Sulpetro ( UK). The parent of Sulpetro ( UK) (at first, Sulpetro and later BP after acquiring...

A jury found that pension schemes and private investors identified by Denmark’s government as recipients of sham refunds were improperly enriched by US$78.7m in total. It apportioned 51% of responsibility to British trader Sanjay Shah and his hedge fund, Solo Capital Partners LLP, under the verdict. The outcome marks a decisive win for the Danish Customs and Tax Administration ( Skat) in the trial proceedings that opened on 7 January 2025. According to the Danish tax authority, investors and pension funds secured bogus repayments of withholding on share dividends by moving securities ownership across jurisdictions shortly before the dividend date......

The Public Accounts Committee, tasked with assessing whether government plans deliver value for money, said in a newly released report that crucial measures to deter evasion are missing. It warned that overseas traders can still falsely sign up as sellers established in Britain because of lax checks by HMRC and Companies House. The committee said the fresh powers given to Companies House—the official registrar of businesses—under the Economic Crime and Corporate Transparency Act 2023 ( ECCTA 2023) are a move in the right direction, but they will not be fully in place until the end of 2026. HMRC should make sure it works with Companies House and the Insolvency Service, the body tasked with tackling corporate abuse, to gauge how the level of fraud influences the tax gap. In the committee’s view, the slow roll-out and the absence of...

Sarabande v HMRC [2025] UKFTT 93 ( TC) SB, a registered charity, holds a long lease of a central London property (the Building). Suture Inc Ltd ( SIL), SB’s wholly owned subsidiary, is not VAT-registered. In 2018, SB opted for voluntary VAT registration and sought to recover £341,487.31 of VAT incurred on purchasing and refurbishing the Building. The project transformed what had been a warehouse-style area into art studios, gallery space and meeting rooms. SB’s objective was to create a venue to nurture an artists’ community, and it devised a structured support scheme for artists called the ‘ Accelerator Programme’. Through this programme, artists were offered curated, subsidised space, comprising studio and exhibition areas together with a bundle of benefits, including use of professional equipment, guidance from sector specialists and hands-on assistance from as well as advice from industry experts and practical support offered by SB...

No less than £6.6bn of yearly compliance spending is directed to intermediaries such as agents, accountants and software developers, the NAO noted in its report. The view is that the total is understated because HMRC has not carried out any research, since 2015, into how much time companies commit to tax compliance, the office said on this......

Fitzgerald and another v HMRC [2025] UKFTT 89 ( TC) In 2020, the taxpayers acquired a property comprising a five-bedroom detached house, an annexe, a garage and a car port. The annexe contained its own kitchen, lounge, bedroom and bathroom. It also had a separate front entrance situated within the main house’s car port on-site. A lockable door from the annexe kitchen provided access into the principal house. The main house and the annexe shared electricity and gas meters and were billed under a single utility account, but they were separately rated for council tax purposes. The taxpayers sought MDR on the footing that the annexe was, in its own right, suitable for use as a single dwelling, distinct from the main house. HMRC rejected the claim and issued a closure notice to that effect. The taxpayers......

Lloyds Asset Leasing Ltd v HMRC [2025] UKFTT 57 ( TC) The appellant, Lloyds Asset Leasing Limited ( LAL), was one of 100 subsidiaries within Lloyds Banking Group ( LBG) that sought cross‑border group relief ( CBGR) in respect of losses suffered by Bank of Scotland Ireland Limited ( BOSI) in its Irish banking business. The issue on appeal was whether LAL was entitled to that relief under CTA 2010, Pt 5, Ch 3 ( CTA 2010, ss 111–128), provisions which have since been repealed. BOSI, a regulated Irish banking entity, had previously been a subsidiary of Halifax Bank of Scotland plc ( HBOS), but became part of LGB following the Lloyds group’s acquisition of HBOS during the 2008 financial crisis. The Irish economy was severely affected by that crisis and, in 2009, a strategic decision was taken that LBG would, going...

Ashley v HMRC [2025] EWHC 134 ( KB) The enquiry concerned the claimant’s sales of properties to special purpose vehicles owned by a company that employed him. HMRC issued closure notices with a charge to tax, asserting the transfers were overvalued and that a taxable benefit arose to the claimant under ITEPA 2003, s 201. The High Court reviewed a series of questions about the SAR, namely: as follows Whether the SAR was confined to data handled by WMBC, or extended to information processed more broadly within HMRC, in particular by the Valuation Office Agency ( VOA) in this matter, for the purposes of responding to the request (the ‘ Scope of the SAR Issue’) Whether material concerning HMRC’s evaluation of the claimant’s tax position during an enquiry constitutes ‘personal data’ for UK GDPR purposes, in whole or in part (the ‘ Personal Data...

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 ( Scottish Power v HMRC) As noted in Tax weekly highlights—23 January 2025, the Court of Appeal has concluded that consumer redress paid by Scottish Power 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 Mc Knight ( HM Inspector of Taxes) v Sheppard, which renders fines and penalties...

AAA Oriental Ltd v HMRC [2025] UKFTT 69 ( TC) In March 2023, HMRC opened a compliance review of the company’s books and records for 7 March 2022 to 8 March 2023 to confirm it was meeting its duties as an employer. In October 2023, HMRC served a Schedule 36 taxpayer information notice. The material sought encompassed mileage logs, directors’ loan account details, invoices (including those for company credit card spending), a medical insurance policy, and fuel card statements. The company lodged an appeal. The tribunal’s first question concerned the company’s stance that paragraph 21 of Schedule 36 barred the notice. That provision prevents HMRC from issuing a notice to check a company’s corporation tax position where the company has already filed a tax return, unless one of Conditions A to E is satisfied as claimed......

Scottish Power ( SCPL) Ltd and Ors v HMRC [2025] EWCA Civ 3. What are the practical implications of this case? This decision marks a notable win for Scottish Power, having lost at both tiers of the Tax Tribunal. The Court of Appeal confirms the von Glehn rule that fines and penalties are not deductible as a matter of public policy; however, it also underscores that the courts cannot stretch that doctrine to capture payments loosely viewed as substitutes for penalties unless Parliament has expressly authorised such treatment... What was the background Scottish Power operated as an Ofgem-regulated generator and supplier of electricity and gas. Between 2013 and 2016 it concluded several settlements with Ofgem under which it agreed to pay nominal penalties of £1 to Ofgem and to make £28m of payments to consumers, consumer groups and charities. In every instance, Ofgem commenced an...

HMRC v Bluecrest Capital Management ( UK) LLP [2025] EWCA Civ 23. What are the practical implications of this case? This decision is highly consequential and may load considerable extra expense onto investment managers and professional services businesses. Its ultimate reach will not be clear until the FTT re-examines the issues (and any near-inevitable further appeals are resolved), or if the dispute proceeds to the Supreme Court. As a result, numerous professional partnerships remain in prolonged uncertainty about their eventual tax treatment. A great many partnerships depend upon the safe harbours within the salaried members regime to remain outside its ambit. The income tax dimension of those provisions is material yet broadly containable; affected individuals would probably bear a similar tax burden, collected through PAYE rather than self-assessment (and many firms already make income tax reserves in a manner comparable to PAYE). The more...

In this issue: International Budgets and Finance Bills Taxes management and litigation Employment taxes Incentivised investment Brexit and assimilated law Real estate tax Individuals and income tax Devolution Daily and weekly news alerts New and updated content Dates for your diary Trackers Useful information International HMRC opens consultation on draft MTT and DTT supporting guidance HMRC has begun consulting on supplementary draft guidance for the Multinational Top-up Tax and the Domestic Top-up Tax. The consultation closes on 8 April 2025. See: LNB News 29/01/2025 15. Budgets and Finance Bills HM Treasury releases the final Charter for Budget Responsibility The final Charter for Budget Responsibility, as laid before Parliament, has been issued. See: LNB News 23/01/2025 18. Taxes management and litigation HMRC outlines outcome of consultation on draft legislation to enhance data collected The review on improving taxpayer data gathered by HMRC has concluded, with outcomes and next steps published. Following the consultation, progress will be made on the Income Tax ( Additional...

Exchequer Secretary to the Treasury, James Murray, announced a review in a letter dated 23 January 2025. It will examine barriers people face when seeking agreement with HMRC on the loan charge, which taxes outstanding loans as income and often leads to higher rates. The work will be headed by Ray Mc Cann, a past president of the Chartered Institute of Taxation. He previously served as a partner at the law firm Joseph Hage Aaronson LLP. Writing to Mc Cann on 23 January 2025, Murray said HM Treasury wants 'the review to bring the loan charge to a close for those people who still owe substantial amounts of money but can see no way to resolve their debts'. He also emphasised that the government is currently in a 'very challenging fiscal situation'......

Bryan Robson Ltd v HMRC [2025] UKFTT 56 ( TC) Bryan Robson Ltd functioned as the personal service company for the former Manchester United and England footballer, Bryan Robson. For many years he served as club ambassador under a succession of agreements. It was accepted before the FTT that the only issue in dispute concerned the 2019 agreement between the club and the company; earlier deals had been made between the club and Mr Robson personally. Under the 2019 agreement, the club was granted a licence to use and exploit Mr Robson’s image worldwide, for any purpose. The agreement also obliged the company to ensure that Mr Robson undertook personal appearances on no fewer than 35 days in each six‑month period. These duties covered hosting at matches and attending events held by the club’s sponsors. The company was paid a flat fee. The...

His Majesty’s Revenue & Customs ( HMRC) announced that a forthcoming change, scheduled to take effect in April 2025, will ensure individuals drawing a private pension for the first time pay the correct amount of tax from the outset. In the January 2025 Pension Schemes Newsletter, HMRC also stated it had refunded £49.5m over the period from October 2024 through to December 2024......

Hoopla Animation Ltd (formerly known as Daisy Boo and Monkey Too Ltd) v HMRC [2025] UKUT 28 ( TCC) The taxpayer company was a special purpose vehicle incorporated to commercialise intellectual property in a pre-school animation concept. It formed part of a wider group through which third party investors placed capital into special purpose vehicles. The plan was that those third party injections would qualify for the Seed Enterprise Investment Scheme ( SEIS) and the Enterprise Investments Scheme ( EIS), respectively. Investment was made by third party investors into such special purpose vehicles through the group, and the structure was intended to secure those outcomes. As part of the arrangements, the company entered into a production services agreement ( PSA) with another group company, under which that company would provide all aspects of production and delivery of episodes of the animation, in return for...

The ACA’s press release of 22 January 2025 In response to HMRC’s consultation, which has just closed, the release warned that pension schemes may face penalties for missing deadlines set under the new tax rules, as required. Until now, retirement savings of up to £1,073,100 have been outside inheritance tax altogether. However, measures outlined in the Autumn Budget 2024 mean that those who take lump‑sum pension assets exceeding £325,000 from a deceased person’s estate will incur 40% tax accordingly under these changes......