Legal News

In this issue: Employment taxes Companies and corporation tax VAT Budgets and Finance Bills International Real estate tax Daily and weekly news alerts New and updated content Dates for your diary Trackers Useful information Employment taxes Court of Appeal dismisses ‘discontinuous contract of employment’ while confirming need for causal link to carelessness for extension of assessment timeframe ( Mainpay Ltd v HMRC) In Mainpay Ltd v HMRC [2025] EWCA Civ 1290, the Court of Appeal confirmed that extended assessment time limits apply where there is carelessness, and held that sporadic work under one contract is not continuous employment. HMRC was required to demonstrate a sufficient causal connection between taxpayer carelessness and the tax lost to justify using the longer time limits, and in this instance it satisfied that requirement. See News Analysis: Court of Appeal dismisses ‘discontinuous contract of employment’ while confirming need for causal link to carelessness for extension of assessment timeframe ( Mainpay Ltd v...

Skatteforvaltningen (the Danish Customs and Tax Administration) v Solo Capital Partners LLP (in special administration) and others [2025] EWHC 2364 ( Comm) What are the practical implications of this case? This constituted the principal trial within the English proceedings brought by SKAT arising from the cum-ex trading scandal. By that stage, SKAT had secured rulings in its favour in Denmark, New York and Dubai, and had attracted some sympathy as the victim of fraud. A number of the trial defendants were subject to criminal proceedings in Denmark and were in custody during the English hearing. Yet the court stressed that judgments handed down abroad were irrelevant to the English action, which was governed by English law and had to be determined strictly on the evidence and submissions before the court. Practitioners should note that even where a foreign tribunal has been invited to rule on...

Investment and Securities Trust Ltd v HMRC [2025] UKUT 331 ( TCC) In broad terms, the higher SDLT rate is engaged when a company buys a high‑value interest in residential property. That charge is switched off if the company acquires the interest solely for the purposes of its property development trade. Likewise, relief from ATED—the annual levy on companies that own high‑value dwellings—can be claimed for each day the company holds the interest exclusively for its property development trade. A helpful contrast emerges: SDLT is a one‑off impost, and entitlement to relief turns on the reason for the acquisition; ATED recurs annually, and relief depends on the purpose for which the property is held. As will become apparent, these distinctions mattered in this case. The taxpayer company had two directors and shareholders: an individual, L, and her son, M. L owned a house in St...

Dialog Semiconductor Ltd v HMRC [2025] UKFTT 1188 ( TC) The appellant sought to purchase Atmel, a US microchip manufacturer, and the parties signed a merger agreement. Under that deal, Atmel was barred from inviting competing bids; however, where an unsolicited superior proposal arose, it could terminate by paying a US$137m termination fee, subject to the appellant’s right to match. In due course, a better bid materialised and Atmel ended the agreement and paid the fee. Following an enquiry, HMRC issued a closure notice assessing the fee to corporation tax as a chargeable gain under section 22 of the Taxation of Chargeable Gains Act 1992 ( TCGA 1992), on the basis it was a capital sum derived from an asset. The notice was appealed. It was agreed in advance of the hearing that the FTT would address only whether the fee came within s...

Mainpay Ltd v HMRC [2025] EWCA Civ 1290 Mainpay operated as an umbrella employer, engaging temporary staff and providing their services to end clients. Each engagement was classified as a temporary workplace, with workers’ expenses reimbursed gross. HMRC issued assessments on the footing that each separate assignment amounted to a permanent workplace, so payroll taxes ought to have been deducted from the expense payments. The arrangements pre-dated the avoidance provisions for intermediaries under section 339A of the Income Tax ( Earnings and Pensions) Act 2003 ( ITEPA 2003). The First-tier Tax Tribunal ( FTT) and the Upper Tribunal ( UT) both dismissed Mainpay’s submissions and upheld HMRC’s assessments. Mainpay appealed to the Court of Appeal, arguing that the tax tribunals had applied the wrong legal test. It contended that, because a worker’s service was carried out under a single contract, there existed one...

Hippodrome Casino Ltd v HMRC [2025] EWCA Civ 1259 Under the core partial exemption rules, VAT on general overheads that cannot be directly linked to particular taxable or exempt outputs must be split to identify the recoverable element, in practice for VAT recovery purposes across the business as a whole overall ultimately. The default basis for this split is the standard method, essentially an apportionment by turnover. At times the standard method fails to give a just outcome that mirrors the actual consumption of costs. Where the standard method’s outcome departs markedly from a fair, 'use'-based result, the standard method override ( SMO) may apply. The appellant, Hippodrome, ran an entertainment complex designed to deliver a ' Las Vegas style experience'. The site extended across five floors and included spaces for live gaming, gaming machines, bars, a restaurant, lounges, conference facilities and a...

Original news Mr S ( CAS-90949- P2D1)—16 June 2025 Summary The Deputy Pensions Ombudsman partially upheld a complaint arising from unreasonable delays in processing a transfer payment. A small award was granted for distress and inconvenience, although the complainant suffered no financial loss. The transfer value ultimately paid was higher than the amount that would have been payable had the transfer been completed in good time. The Deputy Pensions Ombudsman also declined to impose an obligation on the scheme to avert adverse Spanish tax consequences. This outcome serves as a reminder to pension schemes of the need to ensure transfer requests are handled promptly and in a timely fashion. What were the facts? Mr S belonged to the Re Assure Pension Group Stakeholder Pension Plan (the Scheme)......

In this issue: Individuals and income tax Employment taxes Budgets and Finance Bills Companies and corporation tax International Tax compliance and administration Daily and weekly news alerts New and updated content Latest Q& A Dates for your diary Trackers Useful information Individuals and income tax High Court allows taxpayer to pursue judicial review regarding his historic domicile status ( Aubrey Weis v HMRC). As noted in last week’s highlights, in Aubrey Weis v HMRC [2025] EWHC 2479 ( Admin), the High Court accepted the claimant’s request to extend the deadline for issuing judicial review proceedings against HMRC and approved permission for the matter to go forward to a full hearing. The case turns on the taxpayer’s historic domicile and whether he held a legitimate expectation that HMRC would treat him as non- UK...

Aubrey Weis v HMRC [2025] EWHC 2479 ( Admin) In May 2019, HMRC determined that the taxpayer was domiciled in the UK for the period 2005 to 2013 and accordingly amended his returns for those years to assess UK tax on his worldwide income and gains. He had submitted the returns asserting an Israeli domicile, saying he relied on a written HMRC decision from November 2000 and later correspondence indicating that HMRC had accepted that position. He asked for the amendments to be reviewed by an independent HMRC officer. The officer confirmed the amendments, prompting an appeal to the First-tier Tax Tribunal ( FTT). In March 2025, the FTT rejected the appeal, holding that the taxpayer had chosen a UK domicile before 2005: see [2025] UKFTT 348 ( TC). That outcome followed a failed attempt to resolve the dispute through ADR and formal...

FTT holds payments to employees under tax avoidance scheme were taxable earnings despite purported repayment obligation ( GW Martin & Co Limited & another v HMRC) GW Martin & Co Ltd & another v The Commissioners for HMRC [2025] UKFTT 1147 ( TC). The appellants transferred sums to employees on the basis that those employees would subscribe for a newly created class of shares in the appellants (the Shares). These Shares conferred no voting power, no dividend entitlement, and only very limited rights in the event of a winding up. The structure was intended to sidestep PAYE and NICs liabilities while also delivering a corporation tax deduction. The sums advanced were not loans; rather, they were conditional on staff taking up Shares with a nominal value mirroring the payments. Only 1% of that nominal amount was paid up, leaving the remaining 99%...

In this issue: VAT Companies and corporation tax Employment taxes International Indirect taxes—gambling and insurance premium tax ( IPT) Individuals and income tax Key developments Lex Talk®Tax: a Lexis®Nexis community Daily and weekly news alerts New and updated content Dates for your diary Trackers Useful information VAT FTT rules on the VAT treatment of locum medical practitioners ( Isle of Wight NHS Trust v HMRC) As highlighted in last week’s Tax weekly highlights, in Isle of Wight NHS Trust v HMRC [2025] UKFTT 1114 ( TC), the First-tier Tax Tribunal determined that applying the standard rate of VAT to supplies of locum medical practitioners to the Appellant was incorrect. It concluded the supplies were covered by the exemption in Item 5 of Group 7, Schedule 9, Part 2 of the Value Added Tax Act 1994. See...

Isle of Wight NHS Trust v HMRC [2025] UKFTT 1114 ( TC) Item 5 exempts the provision of a deputy for an individual entered on the register of medical practitioners. The supplies comprised a supply by Holt Doctors Ltd and a supply by Resuscitate Medical Services Ltd, respectively. In this matter, Holt Doctors Ltd and Resuscitate Medical Services Ltd each made supplies to the Appellant. Both entities furnished the Appellant with a locum medical practitioner and applied VAT to those supplies. The locum doctors were recorded in the General Medical Council’s register. The Appellant approached HMRC regarding the VAT treatment of the supplies. In doing so, it acted on behalf of other recipients of supplies of locums, including 13 NHS Trusts......

City Blinds Scotland Ltd v HMRC [2025] UKFTT 1100 ( TC) Complete Solutions Europe Ltd v HMRC [2025] UKFTT 1116 ( TC) In City Blinds Scotland Ltd, the FTT endorsed HMRC’s determination seeking repayment of CJRS sums that had been paid in excess. The business, which manufactures and supplies blinds, had lodged five claims for support covering the span from March 2020 through to March 2021. It was accepted by both sides that the workforce in question were fixed-rate employees and that the payroll figures applied in the calculations were accurate. The live dispute comprised two principal questions. The first focused on how to derive 80% of each employee’s reference salary. In its assessment, HMRC translated the monthly remuneration into a daily figure by applying a seven‑day weekly denominator. The company maintained that, because staff worked a five‑day week, the correct divisor should have been five...

In this issue: Employment taxes Funds Taxes management and litigation International VAT Current issues Daily and weekly news alerts New and updated content Dates for your diary Trackers Useful information Employment taxes HMRC publishes guidance for labour supply chains featuring umbrella companies HMRC has issued guidance on the forthcoming PAYE rules, taking effect from 6 April 2026, for labour supply chains that involve umbrella companies. Liability for PAYE on amounts paid to workers engaged via umbrella companies will sit with recruitment agencies, or, where none operate, the end client. The guidance outlines the changes and will be revised as necessary if the draft legislation is altered. See: LNB News 18/09/2025 5. As noted below, additional technical material on these provisions has been introduced as a new chapter ( Umbrella companies legislation: Chapter 11 ITEPA 2003 (from 6 April 2026)) in the Employment Status Manual ( ESM2400– ESM2440). HMRC updates guidance on...

MBP Europe Ltd v HMRC [2025] UKFTT 1069 ( TC) The appellant believed a direct debit mandate was in place to ensure VAT liabilities were settled on time. HMRC had, however, revoked that direct debit. In May 2024, HMRC posted a letter advising that the appellant was being moved to the payments on account regime, and that VAT for the quarterly VAT return to 30 September 2024 had to be paid by 31 August 2024, 30 September 2024 and 31 October 2024. The appellant did not receive this letter, so was unaware that VAT fell due on those dates, expecting instead that the VAT for the period would be collected automatically by direct debit during November 2024. On 18......

Tajinder Pawar v HMRC [2025] UKUT 309 ( TCC) The dispute concerned the taxpayer’s late application for permission to appeal against HMRC’s review decision that confirmed a PLN issued to him. That PLN transferred to him penalties that had first been assessed on a company of which he was both director and shareholder, arising from VAT return inaccuracies. The First-tier Tribunal ( FTT) refused permission pursuant to section 83G(6) of the Value Added Tax Act 1994, applying the Upper Tribunal’s three-stage approach in Martland. Under that approach, the tribunal must: (i) determine how long the delay was; (ii) identify the reason or reasons for the delay; and (iii) consider all the circumstances, weighing the cogency of the explanation for the delay and any prejudice that granting or refusing permission would cause to each side, while giving particular weight to the need for...

What are the practical implications of this case? The central question on this appeal was whether the pension drawdowns were ‘paid in consideration of employment’. HMRC argued that moving occupational pension entitlements to a SIPP, essentially an investment product that does not require employment as a condition, severed the necessary link to the original employment and meant the pension could be taxed in the UK. As many of the UK’s DTCs with other jurisdictions include wording similar to the UK– Portugal DTC, the outcome may have significant consequences for expats whose situations resemble that of the appellant. The First-tier Tribunal Tax ( FTT) offers helpful clarification of the principles to be applied when deciding whether there is a sufficiently strong connection between an expat’s pension withdrawals and their former employment in such cases......

In this issue: Tax management and litigation Anti-avoidance VAT International Individuals and income tax Companies and corporation tax Employment taxes Daily and weekly news alerts New and updated content Dates for your diary Trackers Useful information Tax management and litigation CIOT response to draft legislation—modernising and mandating tax adviser registration with HMRC: The Chartered Institute of Taxation has set out its views on the draft Finance Bill 2026 provisions that would oblige tax agents representing clients to register with HMRC before interacting with the department. See: LNB News 16/09/2025 14. CIOT response to draft legislation— Making Tax Digital for income tax and penalty reform: The CIOT has issued its comments on the draft Finance Bill 2026 measures covering Making Tax Digital for income tax and penalty reform, alongside the draft Income Tax (...

The Prudential Assurance Company Ltd v HMRC [2025] UKSC 34 On the facts, the supplier could levy success fees only once a hurdle rate had been achieved. That threshold was not reached until after the supplier had left the VAT group, so the supplier applied VAT. Prudential then lodged a non-statutory request with HMRC asking whether VAT ought to have been charged. HMRC concluded that it should, and Prudential appealed that conclusion to the First-tier Tax Tribunal. The dispute then moved on to the Upper Tribunal and, thereafter, the Court of Appeal. The questions before the Supreme Court concerned three lines of reasoning advanced to sustain Prudential’s contention that no VAT was due, and the counter-arguments relied upon by HMRC to maintain that VAT had been correctly charged. The strands of argument advanced for Prudential were as follows......

The King (oao Hotelbeds UK Ltd) v HMRC [2025] EWHC 2312 ( Admin) Under the VAT Regulations 1995 ( SI 1995/2518), regulation 29(2) lays down a general rule that a person claiming a deduction of input tax must possess VAT invoices to back the claim, and it also confers a discretion on HMRC to accept alternative evidence of the VAT incurred in place of such invoices. Notice 700, paragraph 16.8.2, explains that HMRC will consider exercising that discretion where it is satisfied that reasonable steps have been taken to obtain VAT invoices; however, it will not entertain using the discretion where there has been a systematic failure to secure VAT invoices. In the circumstances of the case, HMRC’s stance was that there had been a systematic failure to obtain the required VAT invoices......