Legal News

On 6 March 2024, Chancellor Jeremy Hunt set out the government’s Spring Budget amid a weak economic outlook and Conservative polling behind Labour ahead of the forthcoming general election. He had to juggle the political urge to woo voters through personal tax cuts with the constraint of the OBR’s latest fiscal headroom. With income tax reductions viewed as too expensive, reliefs targeted at squeezed households focused on further cuts to employees’ and self‑employed National Insurance contributions, reform of the High Income Child Benefit Charge, and a lower higher rate of Capital Gains Tax on residential property disposals. For Private Client lawyers, the most unexpected move was the abolition of the non‑ UK domicile tax regime. In the months ahead, Private Client advisers will be busy guiding clients through the ramifications, and only time will show whether, under the proposed...

Spring Budget 2024— Key tax announcements. Follow the link to watch the video...

Clipperton and another v HMRC [2024] EWCA Civ 180 Under an arrangement dubbed ‘ Aikido’, the taxpayers’ company, WY, formed a subsidiary ( WS) that created A shares and a single B share. WY transferred the B share into a trust, under which WY retained an ongoing interest, with a sum to be paid to charity, though the principal beneficiaries were the two shareholders. WY then subscribed for another WS A share at a hefty premium, and WS thereafter implemented a reduction of capital, generating distributable reserves. The result was that, when WS declared a substantial dividend on the B share, the shareholders then became entitled to virtually all of the proceeds. HMRC contended that, notwithstanding the elaborate steps through which WY’s profits moved, the funds amounted to a distribution by WY once they reached the shareholders. The taxpayers maintained that there was a...

Brown and another v Revenue and Customs Commissioners [2024] EWCA Civ 92 What are the practical implications of this case? The consequences for FA 2003, s 45 are relatively limited. That provision was substantially reworked with effect from 17 July 2013, and many SDLT avoidance arrangements centred on it have already been contested and concluded. Nonetheless, the idea of consideration being provided indirectly is mirrored in FA 2013, Sch 4, para 1, which defines the fundamental notion of chargeable consideration. In that light, the Court’s treatment of what amounts to consideration given indirectly has broader practical importance. It will guide advice on more intricate structures, particularly where third parties are indirectly involved in the commercial framework. The Court also addressed a procedural issue concerning how to assess the notional transaction that arises when the anti-avoidance rule in FA 2003, s 75A is engaged. There had been...

Mark Stolkin and others v HMRC [2024] UKFTT 160 ( TC) The taxpayers were shareholders in a company that purchased a sizeable plot of land in West London (the Site). The company classified the Site as a fixed capital asset of its investment business and, having regard to the company’s original intentions for the property, the FTT concluded that this treatment was correct and appropriate at the time. The Site was the company’s sole fixed asset at that stage. The company altered its plans for the Site after the competent planning authorities relaxed restrictions (on their own initiative, without any prompting whatsoever by the company). The company then subsequently obtained more advantageous planning permission and endeavoured to secure an even stronger position before ultimately selling the Site. Just shy of three years after the acquisition, the company purported to appropriate the Site to...

In this issue Budget and Finance Bills Individuals and income tax Anti-avoidance Taxes management and litigation Employment taxes Key developments Environmental taxes Daily and weekly news alerts Dates for your diary New and updated content Trackers Useful information Budget and Finance Bills Scottish Parliament approves the Scottish Budget The Scottish Parliament has passed the 2024–25 Scottish Budget Bill, confirming changes to Scottish income tax, with fresh 45% and 48% rates for higher earners. See: LNB News 28/02/2024 20. Spring Budget As flagged in Tax weekly highlights—22 February 2024, the Chancellor, Jeremy Hunt, will present the Spring Budget on Wednesday, 6 March 2024. As usual, we will produce overnight analysis of the tax measures, ready on the morning of Thursday, 7 March. Our recent fiscal event coverage is available under the subtopic: 2023–24— Fiscal events including Budget. Individuals and income tax New Regulations reform Making Tax Digital for Income Tax requirements The Income Tax ( Digital Requirements) ( Amendment) Regulations 2024, SI 2024/167 were made on 19...

Thompson v HMRC [2024] UKFTT 138 ( TC) The taxpayer had been employed in IT until 2013, when he chose to work for himself as an IT consultant. He secured assignments through an organisation ( BFB) that specialises in IT contracting, operating on the basis that he would be paid under the Pay-as-you-earn ( PAYE) regime, with deductions for income tax and National Insurance contributions ( NICs). Although the arrangements were not fully clear to the FTT, the taxpayer also received remuneration for his services from another company, Atlas Trustees Ltd. Neither BFB nor Atlas made any deductions for income tax or NICs. Mr Thompson’s 2013–14 tax return reported his employment income but omitted the amounts paid by BFB and Atlas. After opening an enquiry, HMRC wrote to the taxpayer setting out the further tax due and stating that HMRC......

Monmore Properties Ltd v HMRC [2024] UKFTT 127 ( TC) The appellant acted as the representative member of a Value Added Tax ( VAT) group. The tribunal’s determination arose from a preliminary hearing convened to resolve two threshold issues: whether the appellant’s appeal had been brought within time, and whether HMRC’s assessments covering a 27‑month span (five VAT return periods) were out of time. The broader controversy was not addressed at this stage, as it was a matter for the substantive appeal, and concerned the VAT treatment of services provided by VAT group members to persons outside the VAT group. At the preliminary hearing it was also established that HMRC had not issued a single global assessment. That clarification was relevant because the wider dispute referred to......

NBC ( Administration Services) Ltd v Revenue and Customs Commissioners [2024] UKFTT 120 ( TC) What are the practical implications of this case? Grasping this judgment will aid practitioners representing clients who wish to challenge a deregistration decision or an information notice issued under FA 2008, Sch 36 Pt 1. The FTT has offered useful guidance on the reach of its own discretion, and that of HMRC, when considering deregistration. It confirmed that, following Caerdav Ltd v HMRC [2023] UKUT 00179 ( TCC) (unreported by Lexis Nexis®UK), the FTT does have jurisdiction to entertain appeal grounds advancing public law arguments where the statutory scheme permits. Under FA 2004, s 159(6), Parliament expressly requires the FTT to determine ‘whether the registration of the pension scheme ought to have been withdrawn’, rather than, as the FTT noted, asking what decision it would make if...

HMRC v IPS Progression Ltd [2024] UKFTT 136 ( TC) IPS contended, without success, that the ILO bonus represented a loan to be repaid once the individual ultimately received a bonus. The FTT instead concluded that: IPS never truly intended to run a bonus scheme or pay bonuses to staff, had no plan to recover the ILO bonus amounts from employees, and the employees did not expect to repay them it was questionable whether the ILO bonus payments were loans at all whatever their legal character—loan, earnings or bonus—the payments served no purpose other than to provide a purported justification for not paying tax on part of employees’ earnings The FTT also held the arrangements were notifiable under DOTAS as they amounted to a standardised product. IPS dictated standardised paperwork that required no material tailoring to apply across more than 1,500...

In this issue: Budget and Finance Bills Individuals and income tax Employment taxes Stamp and transfer taxes Companies and corporation tax VAT Tax management and litigation International Daily and weekly news alerts New and updated content Dates for your diary Trackers Useful information Budget and Finance Bills Finance Bill 2024 receives Royal Assent on 22 February 2024 The Finance Bill 2023–24, also referred to as Finance Bill 2024 (and the Autumn Finance Bill 2023), has: completed all remaining Parliamentary stages on 21 February 2024, the same day a refreshed set of Explanatory Notes was issued, capturing the new clause and other government amendments approved on 5 February 2024; and obtained Royal Assent on 22 February 2024, and is now the Finance Act 2024. See: House of Lords calendar for 22 February 2024, the...

HMRC v Ridgway [2024] UKUT 36 ( TCC) The taxpayer acquired a property consisting of two separate registered titles. The first title covered a semi-detached house with gardens, while the second comprised adjoining land with a building known as the Old Summer House, originally used as a garage and later as an artist’s studio. His solicitor advised that, if the Old Summer House were in commercial use at completion, the lower SDLT rate for mixed-use property could be applied. Two weeks ahead of completion, the taxpayer arranged for the vendors to grant a six-month commercial lease to a photography business to support a mixed-use claim. The lease included a covenant preventing the building from being used for residential purposes. The taxpayer submitted his SDLT return on a mixed-use basis, but following an enquiry HMRC issued a closure notice assessing SDLT at the...

Metatron DOO v HMRC [2024] UKFTT 115 ( TC) The appellant, a company established and registered for VAT in Slovenia, challenged HMRC decisions refusing repayment of amounts it says were wrongly charged by UK suppliers. Those amounts arose when it purchased goods from UK suppliers via the e Bay platform. The appellant explained it had asked the suppliers to apply the zero rate of VAT to the goods, but that request was declined. HMRC applied to have the appeals struck out on the basis that, under rule 8(2) of The Tribunal Procedure ( First-tier Tribunal) ( Tax Chamber) Rules 2009, SI 2009/273, the FTT had no jurisdiction to consider HMRC’s refusal to provide a refund in such circumstances, and, under rule 8(3), there was no reasonable prospect of the appeals succeeding. The purchases in question were made through e Bay from UK sellers and, the...

Shivani Mathur v HMRC [2024] UKUT 38 ( TCC) On 23 April 2015, Deutsche Bank AG ( DB) reached a negotiated resolution with the New York State Department of Financial Services concerning manipulation of interbank offered rates. As a consequence, DB was required to end the employment of several individuals. On 30 April 2015, Ms Mathur was dismissed by her employer, DB Group Services ( UK) Limited (the Employer), a company within the DB group (the Termination). Ms Mathur brought Employment Tribunal ( ET) claims against the Employer, DB, and others, alleging: harassment related to sex under the Equality Act 2010 ( Eq A 2010); direct sex discrimination under the Eq A 2010; victimisation under the Eq A 2010; whistleblowing detriments under the Employment Rights Act 1996 ( ERA 1996); and unfair dismissal under the ERA 1996. In May 2016, after a preliminary hearing but ahead of any full hearing, Ms Mathur and the...

The horticultural firm, Jersey Choice Ltd, had earlier relied on the UK’s low-value consignment relief scheme, which spared items priced under £15 from import VAT, when supplying its goods to the UK by mail order. However, in 2012, the UK enacted legislation removing this relief for mail-order consignments originating in the Channel Islands, Jersey and Guernsey, a change the company argued contravened EU law, according to the court in its decision when rejecting the appeal......

Brown and another v HMRC [2024] EWCA Civ 92 The arrangement in question comprised the following pre-arranged steps: the taxpayers incorporated an unlimited company the taxpayers contributed cash of an amount sufficient to fund the purchase by taking up shares and promissory notes in the company at completion: the company paid the vendors the agreed purchase price for the property and thereby acquired the property, at the same time, the company reduced its capital and made a distribution in specie of the property to the taxpayers The scheme was promoted on the footing that, as a consequence of these steps, no SDLT arose on the acquisition of the property: by the company on its purchase from the vendors, because the then...

In this issue: VAT Companies and corporation tax Stamp and transfer taxes Taxes management and litigation Employment taxes Budget and Finance Bills International Pensions Daily and weekly news alerts New and updated content Dates for your diary Trackers New and updated content Latest Q& As Useful information VAT Supreme Court finds appellant had no reasonable grounds for its claim that the UK breached EU law in withdrawing the low value consignment VAT relief from supplies from the Channel Islands ( Jersey Choice Ltd v HM Treasury) As noted below, in Jersey Choice Ltd v HM Treasury [2024] UKSC 5, the Supreme Court examined a Francovich damages action issued by the appellant against HM Treasury, seeking recompense for loss and damage said to stem from the UK’s 2012 abolition of the low value...

Duel Fuel Nutrition Ltd v HMRC [2024] UKFTT 104 ( TC) The disputed item combined a flapjack with either a cake slice or a brownie, packaged and sold as a twin-pack and promoted for sports nutrition. Its purpose was to supply pre-activity carbohydrates for energy through the flapjack, and post-activity protein to support muscle repair via the cake or brownie. The product also included vitamins and minerals. The food zero-rating under Group 1 of Schedule 8 Part I to the Value Added Tax Act 1994 ( VATA 1994) sets out defined exceptions. Among them is ‘confectionery, excluding cakes or biscuits, save for biscuits wholly or partly coated with chocolate or a product alike in taste and appearance’. The appellant maintained that the flapjacks, cake portions and brownies qualified as cakes and so were outside that exclusion. In the alternative, the appellant submitted that the goods were not, in...

In this issue: Finance Bill 2024 Companies and corporation tax International VAT Employment taxes Partnerships Daily and weekly news alerts New and updated content Dates for your diary Trackers Useful information Finance Bill 2024 New Electricity Generator Levy provision added to Finance Bill as it progresses to House of Lords Finance Bill 2024 has advanced further through Parliament, with the government inserting a new measure at clause 21, prompting the renumbering of all subsequent clauses, to ensure the electricity generator levy ( EGL) does not apply to new generating plant. The Bill has now completed all stages in the House of Commons and has been introduced in the House of Lords, with the Lords’ text of the Bill now published. The EGL measure was brought in via a Ways and Means resolution debated on 5...

BAT Industries plc and others v HMRC [2024] EWHC 195 ( Ch) The Claimants belonged to the Franked Investment Income Group Litigation Order ( FII GLO), created in 2003. Participants in the FII GLO have established that, when certain tax was remitted to HMRC, payment was made under a mistaken belief that the UK regime then governing overseas dividends complied with various European treaty provisions, whereas it did not. Consequently, FII GLO members are entitled to restitution from HMRC of sums paid under that mistake of law. The outstanding issue concerns whether, and to what degree, members have issued claims within the applicable limitation period. The default rule is that a claim for unjust enrichment, including those pursued in the FII GLO, must be commenced within six years from accrual of the cause of action. Given that the unjust enrichment arose when tax was paid to HMRC...