Legal News

In this issue: Employment taxes VAT International Individuals and income tax Taxes management and litigation Daily and weekly news alerts New and updated content Dates for your diary Trackers Useful information Employment taxes Appeal court rules that loans advanced through a remuneration trust were chargeable as disguised remuneration and that the linked costs were non-deductible ( Marlborough DP Limited v HMRC). In Marlborough DP Ltd, the Court of Appeal dismissed the taxpayer’s case and upheld the Upper Tribunal ( UT). It found that amounts lent to a director under a remuneration trust fell within the disguised remuneration regime in Part 7A of the Income Tax ( Earnings and Pensions) Act 2003 ( ITEPA 2003), as they were made in connection with employment. The Court further concluded that the associated payments were not allowable for corporation tax, since they were not incurred wholly and exclusively for the purposes of the company’s trade. See News Analysis: Court of Appeal...

Osmond and Allen v HMRC [2025] UKUT 183 ( TCC) What are the practical implications of this case? The UT’s ruling reinforces the separation between a transaction’s inevitable outcomes and its underlying objective, aligning with advisers’ long‑held view that the TIS rules were never engaged where a transaction principally sought to mitigate capital gains tax ( CGT), and did not principally aim to reduce income tax. Delivered alongside other judgments underscoring the weight of taxpayers’ subjective aims, the ruling confirms that merely bringing about unavoidable tax results does not, by itself, defeat the main purpose test; something additional is required (as Lady Justice Falk explained in Blackrock Hold Co 5 v HMRC [2024] STC 740 ( Blackrock)). It illustrates that proof indicating a subjective main purpose is indispensable and cannot be avoided, even when the tax effects are tightly intertwined with the act itself. In...

Marlborough DP Ltd v HMRC [2025] EWCA Civ 796 The dispute involved Marlborough DP Ltd ( MDPL), a dental practice owned outright and managed by Dr Thomas, which adopted a promoted tax avoidance arrangement using payments to an RT. Those payments, broadly matching MDPL’s yearly profits, were subsequently advanced to Dr Thomas as loans. The exclusive aim was to withdraw MDPL’s profits in a manner that avoided tax exposure while permitting MDPL to claim a deduction for those amounts when computing the profits of its dental trade. HMRC issued corporation tax closure notices, PAYE determinations and NIC decisions, all of which MDPL challenged. Before the First-tier Tax Tribunal ( FTT), the company accepted that the planning failed and acknowledged that, if the sums were not taxable as employment income, no corporation tax deduction arose. It therefore did not deliver the intended tax outcome or any...

JPMorgan Chase Bank NA v HMRC [2025] UKUT 188 ( TCC) At issue on appeal was how VAT should properly apply to services provided by JPMorgan Chase Bank NA (‘ CBNA’) to JPMorgan Securities plc (‘ SPLC’). The companies formed a VAT group; ordinarily, intra‑group supplies are generally ignored for VAT purposes, but not in this instance because the services were ‘bought‑in’ and therefore fell squarely within the anti‑avoidance rules in section 43(2A) and (2B) of the Value Added Tax Act 1994......

HMRC v Dolphin Drilling Ltd [2025] UKSC 24 Dolphin hired the Borgsten on charter from a related entity to act as a tender support vessel ( TSV), delivering tender assisted drilling ( TAD) operations to the Dunbar oil installation under a contract with the platform’s operator, Total. Beyond the TAD scope, and in addition to delivering those services, the Borgsten also served as living quarters for approximately sixty members of Total’s workforce engaged on Dunbar, alongside the company’s own crew based on the Borgsten. HMRC took the view that the hire restriction in section 356N of the Corporation Tax Act 2010 ( CTA 2010) was in point; however, the company contended that the carve‑out in CTA 2010, s 356LA(3) applied, on the basis that it was reasonable to assume the Borgsten’s use for housing Total personnel was ‘unlikely to be more than...

In this issue: Energy and environment Stamp and transfer taxes Anti-avoidance Individuals and income tax VAT Taxes management and litigation Daily and weekly news alerts New and updated content Dates for your diary Trackers Useful information Energy and environment Supreme Court clarifies tax rules for oil contractors and defines ‘incidental to another use’ ( HMRC v Dolphin Drilling Ltd) In HMRC v Dolphin Drilling [2025] UKSC 24, the Supreme Court unanimously rejected Dolphin Drilling’s appeal, confirming that the hire cap on tax deductions applies to the Borgsten Dolphin. The Court decided the vessel’s accommodation services were not ‘incidental to’ its drilling activities, so it was a ‘relevant asset’ for the purposes of section 356LA(3) of the Corporation Tax Act 2010 ( CTA 2010). See News Analysis: Supreme Court clarifies tax rules for oil...

Commissioners for His Majesty’s Revenue and Customs v Dolphin Drilling Ltd [2025] UKSC 24 Background Total E& P UK Ltd (‘ Total’) conducts drilling at the Dunbar oil platform in the North Sea. As the Dunbar does not have the infrastructure for active drilling, it needs the assistance of a tender support vessel (‘ TSV’) to provide tender assisted drilling (‘ TAD’) services. TSVs are different from accommodation vessels, which function solely as offshore hotels, commonly referred to as ‘flotels’. Seeking to restart drilling at the Dunbar in 2012, Total invited Dolphin Drilling Ltd (‘ Dolphin’) to bid for the supply of a TSV. Dolphin proposed using a semi-submersible drilling rig converted into a TSV, the Borgsten Dolphin (‘the Borgsten’), which it leased from an associated entity, Borgsten Dolphin Pte Ltd (‘ BDPL’). On 11 November 2011, Total awarded Dolphin the contract to deliver TAD...

Conservatory Insulations Northwest Ltd v HMRC [2025] UKFTT 705 ( TC) HMRC sought to have the appeal struck out on two bases: the FTT lacked jurisdiction to determine the point; and the appeal had no reasonable prospect of success. Both grounds hinged on HMRC’s stance about the timing of the assessment, which the FTT rejected. The appellant’s agent, acting on the company’s behalf, told HMRC about errors affecting VAT return periods that fell within the relevant window for notifying errors and raising assessments. It was accepted by both sides that the material provided to HMRC amounted to evidence of facts which, in HMRC’s view, was sufficient to warrant making the assessment, and that the relevant deadline for issuing the assessment was one year from the date HMRC had......

Osmond and Allen v HMRC [2025] UKUT 183 ( TCC) The taxpayers owned shares in a company that met the conditions for EIS disposal relief. In late 2014, worried that the EIS rules might be overhauled, they sought to lock in that relief while it was still available. Achieving this required triggering a CGT disposal, so they carried out share buy-backs. The price paid on the buy-backs was limited to no more than a return of capital, ensuring no income tax charge arose, and any CGT was removed by the EIS disposal relief. HMRC then issued counteraction notices under the transactions in securities ( Ti S) provisions, assessing the taxpayers to income tax on the basis that their main purpose in undertaking the buy-backs was to obtain an income tax advantage. Before the FTT, HMRC put forward two arguments. Its primary...

Smart v HMRC [2025] UKFTT 701 ( TC) The taxpayer was a member of a limited liability partnership within a Brazilian financial group (‘ BTG’) whose operations encompassed investment banking, advisory services, and wealth and asset management. On joining the partnership, he was required to acquire shares in various other group entities, with those acquisitions funded by loans advanced by connected entities. Several of these entities paid ‘interest on net equity’ (‘ JCP’) in respect of the shares he held. It was accepted that JCP is chargeable as a dividend from a non- UK company (section 402 of the Income Tax ( Trading and Other Income) Act 2005), or, where the paying vehicle is transparent for tax purposes, as property income ( ITTOIA 2005, ss 268–271). The dispute concerned JCP over three years which was either reinvested in additional shares or applied towards...

BGC Services Holdings LLP v HMRC [2025] UKFTT 700 ( TC) In March 2024, HMRC issued PAYE determinations exceeding £96m under SI 2003/2682, reg 80, concerning the salaried members rules (sections 863A–863G of the Income Tax ( Trading and Other Income) Act 2005) for the 2017–18 to 2019–20 tax years, stating that “the accompanying determination letters are self explanatory”. The taxpayer appealed to HMRC and then to the FTT, asserting that: the salaried member rules were not engaged even if they applied, the quantum was wrong extended assessment time limits (beyond four years) were unavailable, so 2017/18 and 2018/19 were not assessable HMRC had failed to particularise within the determinations why additional income tax was said to arise The taxpayer contended the determinations were defective and that no extra income tax was payable. HMRC applied to the FTT for directions that the taxpayer should provide further and better...

In this issue: Companies and corporation tax Capital gains tax VAT Taxes management and litigation Employment taxes International Devolved taxes Daily and weekly news alerts New and updated content Dates for your diary Trackers Useful information Companies and corporation tax FTT confirms consortium relief ownership proportion based on collective entitlement of link companies ( Eastern Power Networks plc v HMRC) As noted in last week’s Tax weekly highlights, in Eastern Power Networks [2025] UKFTT 703 ( TC), the First-tier Tax Tribunal ( FTT) determined that, when calculating the ownership proportion for consortium relief, the rights of multiple link companies must be considered together, rather than by totalling separate entitlements. It also concluded that a corporate structure established to increase consortium relief entitlements amounted to a scheme with a main purpose of obtaining a tax...

Performance Leads Ltd v HMRC [2025] UKFTT 660 ( TC) Performance Leads Ltd ( PL) operated two sites that located and collected details on people looking for financial guidance. That data—the ‘lead’—was passed to its clients, being IFAs, so that those advisers could reach out to those particular individuals. For each lead supplied, PL was paid a fee by the IFAs. PL itself never communicated directly with the end customer at any stage whatsoever......

Moffat and another v HMRC [2025] UKFTT 663 ( TC) The taxpayers disposed of their shares in CM Ltd. That company owned CYBC Ltd, which ran a pier in Chelsea providing houseboat berths alongside services and maintenance. Owners paid CYBC Ltd annual mooring fees and compulsory maintenance charges, the latter billed on an estimated-cost basis and covering: Utility connections Concierge service Nightwatchman patrols Some owners also obtained a formal mooring licence. The company additionally supplied optional services—such as boat repairs, renovation and leak remediation—charged separately at an hourly rate. The shareholders claimed entrepreneurs’ relief on the share disposal; following an enquiry, HMRC rejected the claims. Penalty assessments were then issued under Schedule 24 to the Finance Act 2007 on the footing that the claims had been made carelessly. The taxpayers appealed......

Candy v Revenue and Customs Commissioners [2025] UKFTT 416 ( TC) What are the practical implications of this case? The clearest consequence of the ruling concerns taxpayers seeking to recover overpaid SDLT who have missed the 12‑month amendment period in section 44. In defined circumstances, it opens a route to reclaim genuine overpayments within a four‑year window. That does not mean paragraph [34] displaces the requirement in section 44; the FTT confirmed as much. HMRC may still contest such claims, subject to the particular facts. The effect of the decision reaches beyond SDLT to overpayment relief in general. The tribunal’s attention to the full suite of materials around the legislation, in order to reach its view, emphasises the breadth of interpretation available for the overpayment provisions and their purpose. Crucially, the judgment should not be treated as a shortcut to ignoring the guidance in...

Eastern Power Networks plc and others v HMRC TC/2023/07750–07753 Following a 2010 acquisition, the taxpayer companies became wholly owned subsidiaries of UK Power Networks Holdings Ltd ( UKPNH). Within the UK Power Networks group, UKPNH operated as a consortium company. The taxpayers submitted claims to consortium relief relying on losses surrendered by companies with available deficits that sat in a separate corporate group ( HW). They aimed to relieve corporation tax by setting those surrendered losses against 74% of each company’s profits. HMRC opened enquiries into the claims and determined that relief was restricted to 20% of the profits, reflecting a 40% entitlement that was then reduced by half under an anti-avoidance restriction. Accordingly, the taxpayers maintained a 74% set-off position, whereas HMRC contended that only a 20% cap applied. The dispute centred on the operation of the consortium relief regime in relation to...

Summary The Pensions Ombudsman has supported a grievance concerning a scheme’s refusal to supply details of a member’s annual allowance status within the expected timescales. Repeated holdups in issuing the necessary statements amounted to maladministration. The scheme had pledged to exceed the obligations set by the relevant disclosure regulations, and it was fair for the complainant to expect that undertaking to be honoured. The commitment created a clear expectation that the promised information would be delivered promptly. This decision illustrates that a pension scheme can be liable where it promises to go beyond statutory duties and then fails to do so. What were the facts? Dr S belonged to the 2008 Section and the 2015 Section of the NHS Pension Scheme (the Scheme)......

In this issue: Private equity and venture capital 2025–26 — Fiscal events, including the Budget Taxes management and litigation Companies and corporation tax Employment taxes Individuals and income tax Share and asset sales VAT Daily and weekly news alerts New and updated content Dates for your diary Trackers Useful information Private equity and venture capital Government issues response to consultation on tax treatment of carried interest Following its consultation on the taxation of carried interest—examining in particular the qualifying conditions for a new regime within the income tax framework and aiming to ensure the treatment most appropriately reflects economic reality—the Government has confirmed plans to introduce that regime from April 2026. The provisions will be set out in Finance Bill 2026, with draft legislation expected before the...

The Scottish Government brought forward the Building Safety Levy ( Scotland) Bill (the Bill) to the Scottish Parliament on 5 June 2025. The Bill establishes a Scottish building safety levy (the ‘ SBSL’, or the ‘levy’) to be imposed on specified residential property developments. Revenues from the levy are to be used by the Scottish Government ‘for the purposes of improving the safety of persons in or about buildings in Scotland’. In particular, the Government plans to apply the funds to the remediation of residential buildings with unsafe cladding. This article outlines the background to the Bill and its key provisions. Background to the Bill The Bill originates in the aftermath of the Grenfell Tower fire in June 2017, which heightened serious concerns over the safety of external wall cladding systems on medium- and high-rise buildings in the UK. Central to the Scottish...

Murphy v HMRC [2025] UKUT 165 ( TCC) The case revolved around a share loss incurred by the taxpayer due to his involvement in the Excalibur avoidance scheme. He filed his tax return for 2005–06 on his form and inserted an entry for ‘2006–2007 tax you are reclaiming now’, explained in the white space as a claim to relief for a loss arising in 2006–07 to be set against income for 2005–06 for that earlier year. The claim was brought under section 574 of the Income and Corporation Tax Act 1988 ( ICTA 1988), being for a period before the provisions were rewritten to section 132 of the Income Tax Act 2007 ( ITA 2007). HMRC later informed the taxpayer of its intention to enquire into the claim as a separate claim under paragraph 5 of Schedule 1A to the Taxes...