Legal News

In this issue: Budgets and Finance Bills Companies and corporation tax Business structures International Employment taxes Taxes management and litigation VAT Individuals and income tax Key developments Daily and weekly news alerts New and updated content Updated Practice Notes Dates for your diary Trackers Useful information Budgets and Finance Bills Progress of Finance Bill 2025 On 23 January 2025, the government set out amendments to the Finance Bill ahead of scrutiny by the Public Bill Committee. The main updates concern Schedule 4 on Pillar Two, clause 21 on the operation of PAYE for internationally mobile employees, Schedule 6 on employee-ownership trusts, and several provisions connected to reforms to the taxation of non- UK domiciled individuals. The amendment paper itself carries short explanatory notes that outline the purpose of the...

Global by Nature Ltd v HMRC [2025] UKFTT 24 ( TC) Under VATA 1994, Sch 8, Group 1, the zero rate of VAT applies to food; however, the legislation also identifies excepted items that are chargeable at the standard rate. Note 1 confirms that references to food extend to drinks as well. Excepted Item 4A captures sports drinks that are advertised or otherwise marketed as products intended to improve physical performance, hasten post-exercise recovery, or promote bulking, together with comparable beverages. It further includes, in either case, syrups, concentrates, essences, powders, crystals, or other products used in preparing such drinks. The appeal focused on whether three products fell within the scope of Item 4A......

Plans to apply tax to unused pension funds and death benefits from April 2027 The Society of Pension Professionals ( SPP) warns that proposals to levy a charge on unspent pension pots and death benefits from April 2027 could spark multiple issues. The professional body highlighted that beneficiaries may encounter avoidable hardship due to likely holdups in settling payments. Potentially lengthy delays in distributing benefits, causing unnecessary difficulty for some recipients The measures were set out by Chancellor Rachel Reeves in October 2024, as part of her first Budget. According to the trade body, the scope of the reforms remains unclear and the implementation deadlines risk being “unrealistic and impractical”. Up to now, retirement savings of as much as £1,073,100 have fallen outside inheritance tax. Under the new approach, however, anyone receiving lump-sum pension assets exceeding £325,000 from a deceased person’s estate would face a 40% tax...

HMRC v Sonder Europe Ltd [2025] UKUT 14 ( TCC) The UT characterised the matter before it and the FTT as a novel point. It observed that none of the authorities cited by either party dealt with the point in issue. There was, nonetheless, common ground that the TOMS Order ought, so far as possible, to be construed in line with the EU legislation it was intended to implement, namely Articles 306 to 310 of the Principal VAT Directive. Article 3 of the TOMS Order concerns a supply that is procured and then supplied for the benefit of a traveller without material alteration or further processing. It emphasised that this was the question tribunals were required to address in determining the appeals. The overarching question was whether that prerequisite was fulfilled......

HMRC v Bluecrest Capital Management ( UK) LLP [2025] EWCA Civ 23 The LLP operated investment funds while also delivering support services to fellow group entities. Portfolio managers oversaw the portfolios and were allocated tranches of capital, over which they exercised discretion in deciding how to invest. Other members undertook functions including technology, facilities, legal and compliance, across the firm and its wider operations, on a continuing basis as required. Members’ remuneration featured discretionary allocations. HMRC took the view that, bar four individuals, the LLP’s members satisfied the three tests under the salaried members rules, so they were to be treated as employees of the LLP for income tax and NICs, with PAYE and NICs to be withheld by the LLP. The LLP appealed. The FTT concluded that all affected members met Condition A, but only those who were not portfolio managers met...

Scottish Power ( SPCL) Ltd and others v HMRC [2025] EWCA Civ 3 The taxpayers are prominent suppliers in the energy market. From 2013 to 2016, they reached settlements with Ofgem, their regulator, resolving investigations into consumer protection. Although Ofgem first proposed hefty fines, it ultimately agreed to a token penalty of £1. That outcome depended on the taxpayers paying significant sums to consumers, charities and an energy consumer campaign, and on their having implemented, or promising to implement, enhancements to compliance and customer service processes. The investigations and settlements were pursued under Ofgem’s statutory powers. HMRC refused corporation tax deductions for the consumer redress outlays. The First-tier Tax Tribunal ( FTT) upheld HMRC’s position, apart from one element of the payments. Both sides appealed, and the Upper Tribunal ( UT) concluded that every payment was...

In this issue: Capital allowances VAT Taxes management and litigation International Capital gains tax Individuals and income tax Funds Daily and weekly news alerts New and updated content Dates for your diary Trackers Useful information Capital allowances FTT decides that quay wall qualifies for capital allowances ( The Mersey Docks and Harbour Company Ltd v HMRC) As highlighted last week, in The Mersey Docks and Harbour Company Ltd v HMRC [2024] UKFTT 1163 ( TC), the FTT upheld the taxpayer’s entitlement to plant and machinery allowances on costs incurred in constructing a quay wall, undertaken as part of delivering a new port terminal in Liverpool. See News Analysis: FTT decides that quay wall qualifies for capital allowances ( The Mersey Docks and Harbour Company Ltd v HMRC). VAT UT decides that admission to the Great...

HMRC v Yorkshire Agricultural Society [2025] UKUT 4 ( TCC) Yorkshire Agricultural Society (the charity) stages and also operates the Great Yorkshire Show, a yearly agricultural exhibition. The appeal focused on how VAT should apply to admission charges for the 2016 edition of the event (the Show). The question was whether the Show met the conditions in VATA 1994, Sch 9, Group 12, Item 1(b) and (c). Under VATA 1994, Sch 9, Group 12, Item 1, a charity’s supplies connected with an event are exempt where the event is (a) organised for charitable purposes, (b) primarily intended to raise funds, and (c) promoted as being held mainly to raise funds. HMRC challenged the First-tier Tribunal’s conclusions in Yorkshire Agricultural Society v HMRC [2023] UKFTT 389 ( TC) that the Show satisfied limbs 1(b) and (c), and took the matter to the UT. The Show served two...

The Mersey Docks and Harbour Company Ltd v HMRC [2024] UKFTT 1163 ( TC) The taxpayer operated the Port of Liverpool. From 2013 to 2017 it built Liverpool2, a new deep‑water container terminal at the port. The works comprised dredging a section of the Mersey riverbed and constructing a quay wall alongside the river, together with a ‘container transition area’ ( CTA) of reclaimed land to the rear of the wall used for storing and handling shipping containers. Ship‑to‑shore ( STS) cranes for loading and unloading containers from vessels were installed to travel on rails set on the quay wall. The taxpayer and HMRC reached agreement on the tax treatment of all items of expenditure other than that relating to the quay wall, which remained the disputed expenditure......

Original news Professor M ( CAS-50740- F3M5 and CAS-38376- G3P7)—19 September 2024 Summary The Deputy Pensions Ombudsman dismissed a grievance concerning the absence of a late retirement uplift and an alleged lack of warning about the repercussions of leaving a pension arrangement. The trustees had no duty, in fact, to counsel a member on the implications of opting out. Even had a duty arisen, the applicant would nonetheless have exited, since his overriding aim was to preserve his lifetime allowance protections. The decision firmly underscores that, even where a duty is owed, any breach must result in a foreseeable loss for the member in question. What were the facts? Professor M belonged to the Universities Superannuation Scheme (the Scheme). He had exceeded the Scheme’s normal pension age and continued contributing, thereby qualifying for a late retirement factor within the Scheme itself......

Bridgecom International Ltd v HMRC [2025] UKUT 3 ( TCC) The FTT informed BIL’s agent, Accura Accountants Ltd ( Accura), that the case had been placed in the complex category, giving BIL 28 days to opt out of the costs‑shifting regime. BIL contends that this notice was ineffective, with the result that the costs regime did not apply. Its submission is that the FTT ought to have notified BIL directly, rather than Accura, because Accura’s appointment had not been validly notified to the FTT... Rule 11(2) of the Tribunal Procedure ( First‑tier Tribunal) ( Tax Chamber) Rules 2009 (the Rules) states that where a party appoints a representative (other than a legal representative) the party must send or deliver written notice of the representative’s name and address to the FTT. In reality, Accura, which was not a legal...

Appiah v (1) Tripod Partners Ltd (2) Home Office ( Case number 2302929/2023) Employment Judge Paul Housego found that Tripod Partners Ltd acted unlawfully by taking money from Michelle Appiah's wages to cover its employer's NIC liability, so her unlawful deduction from wages complaint was upheld. The decision concluded she remained an agency worker, notwithstanding that her engagement with the Home Office operated via a personal service company ( PSC). Appiah had been engaged by Tripod to provide services as an independent social worker to the Home Office......

What is the background to the proposal? Since estate duty arrived in the late nineteenth century, agricultural reliefs have been central to limiting upheaval and enabling farmers to make long-term commercial and environmental choices in this vital, often multi-generational, industry over successive generations. Farmers who are asset-rich yet commonly cash-poor are especially exposed to inheritance tax ( IHT), and, without full agricultural property relief ( APR) and business property relief ( BPR), many would be compelled to dispose of land, fragmenting long-standing family enterprises to settle the tax due. In recent times, however, APR has been viewed as something of a loophole, with many ultra-wealthy individuals acquiring farmland to sidestep IHT. Facing a £22bn gap in the public finances, the government has therefore unveiled changes to both APR and BPR with effect from 6 April 2026, asserting that the IHT regime will be fairer and more...

In this issue: Budgets and Finance Bills R& D taxation Companies and corporation tax International Finance Employment taxes Taxes management and litigation Remedies and tax Daily and weekly news alerts New and updated content Dates for your diary Trackers Useful information Budgets and Finance Bills Progress of Finance Bill 2025 On 19 December 2024, the government published amendments to the Finance Bill for consideration by the Public Bill Committee. The key revisions affect Schedule 4, which concerns the UK’s multinational top-up tax and the domestic top-up tax rules set out in Parts 3 and 4 of the Finance ( No 2) Act 2023. A ‘call for evidence’ dated 20 December 2024 indicates the Committee plans to open its examination of the Bill on 28 January 2025 and aims to finish by Tuesday 4...

FRF ( South Wales) Ltd v HMRC [2024] UKFTT 1145 ( TC) The company took a lease on a disused steel-framed warehouse that had previously operated as a furniture store. It invested over £1.5m converting the building into a motor showroom and claimed allowances for a substantial portion of the outlay. Extensive works were undertaken, with only the following original features remaining: Ground floor slab and foundations Below-ground drainage Incoming services Six of the original ten structural steel portal frames Roof sheeting rails New cladding, glazing, vehicle roller shooter doors and internal services were installed. The completed showroom covered just 57% of the warehouse’s overall footprint. The company maintained that the expenditure was eligible for capital allowances on the basis that the works fell within the definition of ‘conversion’ of......

Chemidex Generics Ltd v HMRC [2024] UKFTT 1146 ( TC). Chemidex Generics Ltd ( CGL) obtained IP tied to certain out-of-patent pharmaceutical products, together with related assets such as marketing authorisations (the Product Assets), from a partnership created by Mr Navin Engineer and Mrs Varsha Engineer (together, the Partners). In most cases, the Partners had put in place profit sharing agreements ( PSAs) with Chemidex Pharma Ltd ( CPL), a company wholly owned by them, as was CGL. Under those PSAs, CPL held the right to exploit the Product Assets. Following the transfer, CGL owned the Product Assets and enjoyed the benefit of the various PSAs. It was common ground that the Product Assets were chargeable intangible fixed assets ( IFAs) and therefore came within the IFA code in Part 8 of the Corporation Tax Act 2009 ( CTA 2009). It was also common ground that CGL and...

JTC Employer Solutions Trustee Ltd v Garnett and another [2024] EWHC 3128 ( Ch) JTC Employer Solutions Trustee Ltd served as trustee to two arrangements: the 2005 Henderson Family Benefit Trust and the 2011 Henderson Group plc Employer‑ Financed Retirement Scheme. Both trusts were intended to deliver benefits to employees, ex‑employees and their families. The defendants, Mr Garnett and Mr Sekhon, appeared as representative beneficiaries and raised no objection to the relief the claimants pursued. The claimants asked the court to rescind a number of deeds establishing sub‑trusts for named beneficiaries and their relatives. Their rationale was that, under section 86(1) of the Inheritance Tax Act 1984 ( IHTA 1984), employee benefit trusts avoid the relevant property regime only where the beneficiary class comprises ‘all or most’ employees or office‑holders (see IHTA 1984, s 86(3)(a)). HMRC’s position was that the exemption was...

FTT considers meaning of interest and decides that an element of redress payments constituted interest ( NHS Mid & South Essex ICB and others v HMRC) NHS Mid & South Essex ICB, NHS Nottingham and Nottinghamshire ICB and NHS Lincolnshire ICB v HMRC [2024] UKFTT 1117 ( TC). The appellants, being Integrated Care Boards ( ICBs), appealed income tax assessments. They maintained, ultimately without success, that no portion of the amounts paid to individuals under the NHS Continuing Healthcare ( CHC) Redress arrangements was “interest” for the purposes of the withholding tax obligation on payments of UK source yearly interest under ITA 2007, s 874, even where that element was computed in the same manner as interest and expressly described as interest. As individuals had no entitlement to CHC sums until the relevant ICB reached a favourable eligibility decision, those who lacked such a...

M R Currell Ltd v HMRC [2024] UKUT 404 ( TCC) The EBT loan within the scheme fell due for repayment on the fifth anniversary and was secured over shares in the taxpayer company, which the shareholder-director had acquired using the loan monies as an element of the planning. The parties were in dispute about whether the FTT had determined that the payment of the contribution to the EBT, or the advance made by the EBT, amounted to the shareholder-director’s earnings. When scrutinising the FTT’s judgment, the UT ultimately held that the tribunal had concluded that it was the payment of the contribution into the EBT that was chargeable to tax as earnings......

Blackfriars Hotel ( UK) Holdings Ltd v HMRC [2024] UKFTT 1095 ( TC) The taxpayer company, Blackfriars Hotel ( UK) Holdings Ltd ( BHHL), functioned as a holding vehicle for two subsidiaries, BHL and TTHL, each owning and running a hotel. BHHL had obtained a sizeable third‑party bank facility, the proceeds of which were used both to subscribe for shares in BHL and to advance a loan to it (the old loan). Consequent upon this financing, BHHL built up significant carried‑forward non‑trading loan relationship deficits. In December 2015, BHHL advanced two intra‑group loans: one to TTHL (the TTH loan) and another to BHL (the new loan). Thereafter, across the following four years, the company generated profits and sought to relieve them by setting off the brought‑forward deficits. HMRC refused the set‑off of those carried‑forward amounts, relying on CTA 2010, Part 14B, the regime...