Legal News

R (on the application of Fluid Systems Technologies ( Scotland) and others) v HMRC [2024] UKUT 322 ( TCC) This judicial review challenged the legality of HMRC’s decision ultimately to refuse the taxpayer’s applications for repayment under the Disguised Remuneration Repayment Scheme created by section 20 of the Finance Act 2020 ( FA 2020). The scheme enables the repayment of particular amounts previously remitted by agreement with HMRC in order to avoid the imposition of the loan charge. A key criterion of the scheme was whether there had been reasonable disclosure and, specifically, whether the information provided was ‘as was sufficient for it to be apparent that a reasonable case could have made that the amount concerned was payable to the Commissioners’ ( FA 2020, s 20(5)(d))......

In this issue: Budgets and Finance Bills Companies and corporation tax Real estate tax Employment taxes Individuals and income tax Daily and weekly news alerts New and updated content Latest Q& A News Dates for your diary Trackers Useful information Budgets and Finance Bills Autumn Budget 2024 Chancellor of the Exchequer Rachel Reeves is set to present the Autumn Budget on Wednesday 30 October 2024. As ever, we will produce overnight analysis of the principal business tax measures featured in the Autumn Budget, to be published promptly on the morning of Thursday 31 October 2024. Budget Responsibility Act 2024 provisions come into force The Budget Responsibility Act 2024 ( Commencement) Regulations 2024, SI 2024/1026, bring into legal effect, from 15 October 2024, provisions within the Budget Responsibility Act 2024 ( BRA 2024) that thereby oblige HM Treasury to first obtain an economic and fiscal forecast from the Office for Budget Responsibility before any minister makes major fiscal...

The insurer is aiming to reverse conclusions that a 2013 ruling failed to settle whether other actions against HMRC were in time, concerning how far a range of UK direct tax measures infringed EU law and what remedies taxpayers could pursue. AXA’s advocate, Jonathan Bremner KC of One Essex Court, said HMRC was 'having two bites of the cherry' by arguing that the limitation point in Prudential Assurance Co Ltd v HMRC could not operate as a precedent. ' It undermines the utility of having a test case in the first place', Bremner noted. This litigation sits among numerous cases arising from the protracted disagreement over HMRC’s approach to dividends from overseas subsidiaries. UK-headquartered companies with foreign subsidiaries maintained they bore a heavier tax burden on dividend receipts than groups with solely UK subsidiaries. Their stance was bolstered by a European Court of Justice...

Haigh v Revenue and Customs Commissioners [2024] UKFTT 810 ( TC) What are the practical implications of this case? Understanding the FTT’s conclusions in Haigh will assist practitioners facing FP 2012 notification refusal appeals. The ruling confirms that, when a taxpayer contests HMRC’s refusal of a notice, the FTT’s role is limited to testing compliance with regulation 4. The tribunal considered itself bound by The Executors of David Harrison ( Deceased) & Simon Harrison v HMRC [2021] UKUT 0273 ( TCC) ( Harrison), which states the FTT has no jurisdiction to review HMRC’s discretion. Drawing on Harrison’s construction of the FP 2012 Regulations, SI 2011/1752, reg 7, it defined the limits of its jurisdiction. Harrison accepts this narrow view yields an unwelcome consequence for taxpayers, and Haigh repeats that passage in full at paragraph 71. As a result, the FTT is confined to applying the tax...

BTR Core Fund JPUT v HMRC [2024] UKFTT 885 ( TC) The taxpayer purchased the leasehold property in Manchester, comprising 350 build-to-rent flats and vacant commercial premises at ground-floor level. In its SDLT return it claimed multiple dwellings relief ( MDR), leading to a liability of about £4.3m. The tax was computed in line with HMRC’s guidance then in force, which stated that MDR calculations should use the higher residential rates. After HMRC updated its guidance, it became evident that this was wrong and that the standard rates could instead be applied. As the taxpayer was by then out of time to amend the return, it submitted an overpayment claim under FA 2003, Sch 10, para 34 for approximately £3m. HMRC accepted that the SDLT return included a mistake and that......

The Trustees of the Panico Panayi Accumulation and Maintenance Settlements Numbers to 4 and Redevco Properties UK1 Ltd v HMRC [2024] UKUT 319 ( TCC) In relation to the trustee appellant, the majority of the trustees of the relevant settlement ceased to be UK resident, instead becoming resident in Cyprus, in August 2004. The company appellant transferred its place of effective management to the Netherlands in January 2008. HMRC served closure notices on the appellants, including assessments under the exit charge provisions in the Taxation of Chargeable Gains Act 1992, ss 80 and 185 respectively. In the trustees’ case, the FTT sought a preliminary ruling from the Court of Justice of the European Union, which led to a CJEU judgment in September 2017 confirming that a trust could benefit from the four EU law freedoms and that imposing an immediate tax charge at the exit date was a...

In this issue: Companies and corporation tax Employment taxes Individuals and income tax Real estate tax Taxes management and litigation Incentivised investment Energy and environment International Daily and weekly news alerts New and updated content Dates for your diary Trackers Useful information Companies and corporation tax DCMS announces Independent Film Tax Credit, with accompanying Regulations made The Department for Culture, Media and Sport ( DCMS) has confirmed an uplift in tax relief for independent film productions. Under the Independent Film Tax Credit, projects with budgets up to £15m can claim a 53% relief on qualifying spend, while those costing up to £23.5m access a tapered rate. To be eligible, a production must feature a UK writer or director, or hold certification as an official UK co‑production. Principal photography must begin on or after 1 April...

Putney Power Ltd and another v HMRC [2024] UKFTT 870 ( TC) The two companies were established by an investment manager to build and run power plants with capital raised through the EIS. Each company allotted shares on 4 April 2016 and sought from HMRC the issue of EIS compliance certificates. In 2020, HMRC determined that EIS relief was not available. The decisions rested on the conclusion that neither entity had commenced trading by the statutory deadline under the EIS rules, namely 4 April 2018. For the first appellant ( Putney), construction of its plant started in September 2017; however, due to the contractor’s delays, the facility did not become operational until August 2018. Ahead of the EIS deadline, Putney had entered into two electricity supply agreements, both expressed to take effect once the plant went live. The sole question before the FTT was...

Mudan and another v HMRC [2024] UKUT 307 ( TCC) In August 2019, the taxpayers purchased a property in London and at first paid SDLT on the footing that it was a residential property. They subsequently amended their return, instead treating the property as non-residential. They contended that substantial work was needed before it was safe for them to live there. The works undertaken included: rewiring installing a new boiler putting a new roof over the boiler house repairing broken windows stripping out the kitchen tanking the basement clearing lots of rubbish from the house and garden Accordingly, they argued that, at the effective date, the building was not suitable for use as a dwelling and therefore was not residential property within section 116(1) of the Finance Act 2003. Following an enquiry, HMRC issued a closure notice...

Revenue and Customs Commissioners v Professional Game Match Officials Ltd [2024] UKSC 29 What are the practical implications of this case? The Supreme Court has endorsed HMRC’s long-held stance on mutuality of obligations: there can be adequate mutuality to satisfy the gateway to an employment contract even where obligations exist only during periods when the putative employee is actually working for the putative employer. Although the nature and breadth of mutuality remain relevant within the overall status evaluation, the absence of continuing mutuality between assignments is not, by itself, a bar to someone being classified as an employee for tax while performing work for their engager. This may, in consequence, create a mismatch between the employment rights an individual accumulates (particularly those dependent on continuity and length of service) and that individual’s tax position. On control, the Supreme Court emphasised the crucial role of...

HMRC v Peter Gould [2024] UKUT 285 ( TCC). Peter Gould ( PG) and Nicholas Gould ( NG) were the principal shareholders of Regis Group ( Holdings) Ltd ( Regis). On 31 March 2016, the board, which included PG and NG, approved an interim dividend of £40m. NG received his distribution in the 2015-16 tax year. PG’s amount, relating to the same share class, was paid in 2016-17, when he was not UK resident. HMRC contended that, for income tax purposes, PG should be regarded as having received his interim dividend at the same time as NG, that is, when he was still UK resident. A dividend is taxable in the tax year in which it becomes a debt that is due and payable......

Finanzamt T v S Case C‑184/23 What are the practical implications of the case? In earlier CJEU rulings, it had been implied that intra‑group supplies of services within a VAT group might attract VAT. This judgment clarifies that approach is mistaken, as members of a VAT group are treated as a single taxable person for VAT purposes. Consequently, VAT‑chargeable services cannot be made to participants within the same VAT group. Accordingly, internal charges within the group fall outside the scope of VAT. The CJEU’s clarification dispels the ambiguity created by its prior case law on this specific point. The ruling is expected to serve as a significant line of argument for tax administrations and impacted businesses across EU Member States. It should also be observed that the Court of Justice’s conclusion aligns with the recent Opinion of A‑ G...

In this issue: Brexit and tax International Taxes management and litigation VAT Real estate taxes Devolution Daily and weekly news alerts Dates for your diary Trackers New and updated content Useful information Brexit and tax SI 2024/976 Retained EU Law ( Revocation and Reform) Act 2023 ( Commencement No 2 and Saving Provisions) ( Revocation) Regulations The UK Government has issued regulations that pause impending changes to how assimilated case law (previously retained EU law) is interpreted. These amendments, set out in section 6 of the Retained EU Law ( Revocation and Reform) Act 2023 ( REUL( RR) A 2023), were scheduled to commence on 1 October 2024 and were intended to revise the approach taken by UK courts to assimilated law, notably the circumstances in which they may depart from it. To support the section 6...

According to a statement from the EU’s highest court, applications for preliminary rulings will continue to be lodged with the European Court of Justice, which will first examine the subject matter of each case. Once that review is complete, any request found to fall solely within one or more defined fields now overseen by the General Court will be redirected to that tribunal there......

Visual Investments International Ltd v HMRC [2024] UKFTT 843 ( TC) Legal advice was obtained to pursue enforcement of an alleged oral agreement concerning the transfer of shares in two broadcasting technology companies to a joint venture, Streaming Investments plc, which later entered creditors’ voluntary liquidation. Broadcasting Investment Group Ltd ( BIG), a subsidiary of the appellant, rather than the appellant itself, held a significant shareholding in the joint venture. The First-tier Tribunal determined that BIG, and not the appellant, was the principal recipient of the majority of the legal services. As the appellant and BIG were not joined in a VAT group, the appellant had no right to recover VAT on services rendered to its subsidiary. Additionally, as set out below, the Tribunal concluded that the appellant’s owners—a father and son—were also recipients of the legal services......

Hill and another v HMRC [2024] UKFTT 844 ( TC) Mr Hill and Mr Mc Cracken served as administrators of two pension schemes that were managed on their behalf by Liddell Dunbar Ltd, a company which subsequently entered liquidation. In January 2018, HMRC formally sent information notices to both men in their capacity as scheme administrators. Their advisers, Independent Tax ( IT), informed them that, because the scheme had been wound up, there ‘should be no need to respond’ to the notices, and advised accordingly. A review by HMRC was then requested; the review upheld the information notices, albeit with certain elements varied. No appeal was lodged against the notices at that stage. HMRC proceeded to issue £300 penalties for failure to comply to the administrators and, in February 2019, followed up with daily penalties being imposed by HMRC. HMRC wrote to the...

On 27 September 2024, Lane Clark & Peacock LLP ( LCP) proposed that National Insurance be applied to the sums companies contribute each month to employees’ pension pots, as a way to raise extra revenue. The remarks come as speculation intensifies over how Chancellor of the Exchequer Rachel Reeves might repair the national budget at her first Autumn Statement, scheduled for 30 October 2024. The newly elected Labour government said that the previous incumbent Conservative Party had left a £22bn shortfall in public finances overall......

In this issue Employment taxes Stamp and transfer taxes Taxes management and litigation Individuals and income tax Daily and weekly news alerts Dates for your diary Trackers New and updated content Useful information Employment taxes As covered in last week’s Tax weekly highlights, in Aramark [2024] UKFTT 832 ( TC) the First-tier Tax Tribunal ( FTT) determined that the appellant was required to account for employer’s National Insurance contributions under the ‘host employer’ provisions within the Social Security ( Categorisation of Earners) Regulations, SI 1978/1689, Sch 3 para 9, as they operated before 6 April 2014. See News Analysis: FTT upholds HMRC’s application of NIC host employer provisions ( Aramark v HMRC). Also noted in last week’s Tax weekly highlights, in Professional Game Match Officials Ltd ( PGMOL) [2024] UKSC 29, the Supreme Court concluded that mutuality and control were sufficient to render referees’ contracts ones of employment, but remitted the matter to the FTT to...

Aramark Ltd v HMRC [2024] UKFTT 832 ( TC) Aramark ( A), the appellant, was a company established in the UK within a group led by a US corporation. Its operations encompassed catering and hospitality support for offshore oil and gas installations located in the North Sea. It supplied personnel (the ‘crew’), goods, and equipment, including food provisions and housekeeping consumables, to the operators of those installations and, from 2004, it did this by drawing upon resources supplied by a non- UK group member company ( OSI). Pursuant to the arrangement between A and OSI, employees who had previously been directly engaged by the appellant to service the operators’ contracts were transferred to OSI. The commercial purpose was to remove the cost of secondary Class 1 NICs so that A remained competitive. The question for the FTT was whether the host employer...

In this issue Employment taxes Companies and corporation tax International business structures VAT Taxes management and litigation Individuals and income tax Key developments Daily and weekly news alerts New and updated content Dates for your diary Trackers Useful information Employment taxes Supreme Court upholds Court of Appeal and remits case to the FTT to decide whether individual contracts are employment contracts ( Professional Game Match Officials Ltd v HMRC) In Professional Game Match Officials Ltd [2024] UKSC 29, the Supreme Court unanimously dismissed PGMOL’s appeal. Relying on the First-tier Tax Tribunal’s findings of fact and the parties’ extensive submissions, it held that the irreducible minimum of mutuality of obligation and control needed for an employment contract between the part‑time referees and PGMOL was present for the individual match agreements. However, that did not...