Legal Practice Notes

STOP PRESS: The Economic Crime and Corporate Transparency Act 2023 ( ECCTA 2023) obtained Royal Assent on 26 October 2023. Designed to strengthen corporate openness across the UK, it chiefly delivers Companies House reforms and alters elements of the Companies Act 2006. The Act also aims to modernise the rules governing limited partnerships and equips authorities with enhanced powers to combat economic crime. ECCTA 2023 is being rolled out in phases. Several provisions took effect on 4 March 2024 and may affect this content. For more detail, see Practice Notes: Implementation of the Economic Crime and Corporate Transparency Act 2023 and The Economic Crime and Corporate Transparency Act 2023—tracker, with particular emphasis on the legislation and consultation tracker. Note that various statutory and regulatory measures govern and restrict the selection of company and business names......

This Practice Note examines unincorporated associations. It outlines the legal context and organisational form of an unincorporated association, and weighs the benefits and drawbacks of using this model. What is an unincorporated association?......

Practice Note This Practice Note offers direction on pinpointing the reason for dismissal and, once a potentially fair reason is shown, how a tribunal assesses whether the employer’s decision falls within the band (or range) of reasonable responses open to a reasonable employer. It outlines the statutory potentially fair reasons for dismissal, clarifies what amounts to an automatically unfair dismissal, and considers how a tribunal may approach a case alleging a reason that is both unfair and discriminatory. It also addresses situations where, during the hearing, the genuine reason for dismissal surfaces as different from the one first pleaded, and examines how such developments are handled. In addition, it explores the bearing of relevant Codes of Practice and the European Convention on Human Rights ( ECHR) on the overall assessment of fairness in dismissal decisions......

The unexplained wealth order ( UWO) Unexplained wealth orders ( UWOs) are an investigative tool available to enforcement bodies in High Court civil recovery proceedings brought under Part 5 of the Proceeds of Crime Act 2002 ( POCA 2002). Introduced on 31 January 2018 with retrospective effect, they apply irrespective of whether the respondent obtained the property before that date. For a detailed discussion of UWOs and the reasons behind their introduction, see News Analysis: Criminal Finances Act 2017—unexplained wealth orders. A UWO requires a person suspected of involvement in, or association with, serious criminality to justify the source of assets that seem disproportionate to their known income. In short, the order compels the respondent to provide a ‘statement’ outlining the nature and extent of their interest in the property identified in the order, together with an explanation of how it was acquired. Failure to give a...

Complex US and UK tax issues for estates UK practitioners frequently face scenarios in which intricate US and UK tax questions arise for estates of the deceased who were domiciled in the UK at death, and for estates exposed to US estate tax through citizenship or domicile. Further complications occur where the deceased owned property situated in the US or the UK at the time of death. From 6 April 2025, UK inheritance tax ( IHT) will be determined by a new long‑term residence concept rather than domicile or deemed domicile. Under this rule, an individual who has been UK resident for 10 of the previous 20 tax years will be treated as a long‑term UK resident ( LTR) and subject to IHT on worldwide assets — see Practice Notes: A new residence‑based regime for IHT from 2025–26 and New IHT regime from 6 April 2025— FAQs....

ARCHIVED : This Practice Note has been archived and is not maintained. On 6 October 2011, the United Kingdom and Switzerland entered into an accord on tax co‑operation, formally titled the UK- Swiss Confederation Taxation Cooperation Agreement (the ‘ Agreement’). Although not a disclosure facility, the Agreement afforded UK taxpayers an opportunity to fully regularise their tax position where income and gains from accounts in Switzerland had not previously been properly notified to HMRC for UK tax purposes. Its scope is confined solely to the assets situated in Switzerland......

ARCHIVED: This archived Practice note covers: overseas workday relief chargeable overseas earnings specific employment income remittances after termination of employment the exemption for minimal foreign earnings allowable deductions and split year treatment STOP PRESS: Abolition of non-dom regime and introduction of residence-based IHT regime. Finance Act 2025 ( FA 2025), which received Royal Assent on 20 March 2025, abolishes the remittance basis of taxation and introduces a residence-based system from 6 April 2025. FA 2025 also removes domicile as the key factor in determining inheritance tax liability. Other updates include revisions to excluded property status, removal of protected settlements status for offshore trusts, and adjustments to overseas workday relief. For more, see Practice Notes: The abolition of the remittance basis of taxation from 2025–26 and A new residence-based regime for IHT from 2025–26. See also: Finance Bill Tracking Service: Key dates (...

Tax domicile (domicile fiscal) Persons whose domicile fiscal is in France are liable to French taxation on their worldwide income. Here, domicile is understood in the civil law sense and typically aligns with an individual’s habitual residence. Tax household ( Foyer fiscal) The Foyer fiscal covers spouses or civil partners together with their dependent children, and, unless they are living apart, the unit is assessed jointly for tax. Statutory domicile test Article 4 B of the Code général des impôts ( CGI) sets out a statutory domicile test. A person is treated as domiciled in France for tax wherever any of the following apply: their foyer (family home) or lieu de séjour principal (main abode) is located in France they carry on a professional activity in France (employed or self-employed), unless they can demonstrate that such activity is merely ancillary the centre of their economic interest is located in...

On 23 June 2016, the United Kingdom held a referendum on its EU membership, with a majority opting for the UK to leave the EU. On 29 March 2017, the Prime Minister sent formal notice of the UK’s intention to withdraw, setting in motion the Article 50 TEU process. At 11 pm on 31 January 2020 (exit day), the UK’s withdrawal took effect in law and the UK ceased to be an EU Member State. Exit day signalled the close of the Article 50 withdrawal phase and the beginning of a time-limited transition/implementation period, during which the interim arrangements in Part 4 of the Withdrawal Agreement applied. These transitional measures created a standstill period while the UK and the EU set about implementing the Withdrawal Agreement and negotiating the legal terms governing their future relationship, to apply after the transition ended. The EU- UK Trade and...

ARCHIVED: This archived Practice Note sets out details of the Data Protection, Privacy and Electronic Communications ( Amendments etc) ( EU Exit) Regulations 2019, SI 2019/419, together with the Data Protection, Privacy and Electronic Communications ( Amendments etc) ( EU Exit) Regulations 2020, SI 2020/1586, plus salient elements of the EU- UK Withdrawal Agreement and the EU- UK Trade and Cooperation Agreement insofar as they concern data protection. It is no longer updated and is provided for background only. For guidance on continuing divergence between data protection requirements under the GDPR frameworks, refer to Practice Note: Introduction to the EU GDPR and UK GDPR. This Practice Note examines how Brexit affects routine processing of personal data under the General Data Protection Regulation, Regulation ( EU) 2016/679 ( EU GDPR), which took direct effect in the UK and all other EU Member States on 25 May 2018, and,...

This Practice Note addresses the zero rate of VAT available to developers who sell or grant leases of specific buildings they have built, where the property is designed for charitable use. Such properties are termed buildings for a relevant charitable purpose ( RCP). This Practice Note contains citations to case law of the EU Court of Justice. For advice on whether rulings of the Court of Justice bind the UK courts, see Practice Note: Assimilated law— Assimilated case law. For commentary on assimilated law (previously retained EU law) and tax more broadly, including the bespoke approach now applied to VAT legislation, see Practice Note: Assimilated law and tax. The Court of Justice decisions cited in this Practice Note were issued before the end of the implementation period (which the UK entered on 31 January 2020 and which concluded at 11 pm on 31...

Under the UK’s VAT regime, taxable supplies can be subject to the standard rate, a reduced rate, or be zero-rated. This Practice Note sets out the principal categories of zero-rated and reduced-rate supplies, and offers further detail on five commonly encountered zero-rated areas in practice: food books and printed materials construction of buildings, plus some sales and leases by property developers drugs, medicines and appliances clothing and footwear Zero-rated supplies A zero-rated supply is still treated as a taxable supply even though no VAT is charged on it, making it different from an exempt supply. This leads to two key consequences: zero-rated supplies count when assessing whether a business must (or is entitled to) register for VAT; see Practice Note: Who must and who can register for VAT in the UK? input tax attributable to a zero-rated supply can be recovered from HMRC (whereas input tax on an exempt supply is not...

Everyone knows that value added tax ( VAT) is a levy that pushes up the cost of goods and services purchased by UK consumers. For a tax lawyer, before delving into precisely when it bites and the way it is run, it is vital to appreciate more about what it is intended to achieve. Where does VAT come from? There are numerous varieties of value added or sales taxes worldwide. The UK’s VAT regime stems from the European Union ( EU). The EU’s common framework for VAT is contained in Council Directive 2006/112/ EC of 28 November 2006 on the common system of value added tax (the VAT Directive). It is described as common because it requires EU member states to enact domestic laws giving effect to the system. Nevertheless, within that structure there are several areas where member states may choose whether, and in what...

Charities who meet the criteria of being a charity Charities that satisfy the definition are primarily established to deliver what can be regarded as welfare services. This is usually the heart of what they do, yet it has long been contentious with HMRC, who will only disregard VAT on such services in narrowly defined situations. Broadly, they accept exemption where the services are supplied at a price ‘significantly below’ cost to ‘distressed’ individuals, for their relief. HMRC, somewhat prosaically, say ‘distressed’ covers someone ‘suffering pain, grief, anguish, severe poverty etc.’, but it does not extend to the unemployed unless they qualify on grounds other than being out of work. HMRC take a narrow view of when relief applies. The problem is the lack of a statutory meaning for ‘significantly below’, although HMRC have stated the cost must be subsidised by at least 15%. As welfare...

Qualifying organisations Relief applies to: charities meeting criteria; corporate bodies wholly owned by, and paying profits to, a charity; non‑profits within VATA 1994 Sch 9 Groups 9, 10 and 13, e.g. unions, professional/knowledge associations, civic/political/religious bodies, amateur sports bodies and mainly volunteer‑run groups A charity’s trading subsidiary may run exempt events if wholly owned and passing profits to the charity; HMRC can allow limited tax‑free development reserves where compliant with charity law, but may refuse where abuse or corporate tax relief is in point Events must be promoted to raise funds, be incidental and infrequent; tell attendees; keep minutes, costings and publicity as evidence; HMRC’s anti‑competition power is rarely used and is appealable Typical events include concerts, fêtes, sales and sponsored sport; not exempt are routine socials, 16+ same‑kind events at one site, sales outside an event, and TOMS...

This Practice Note outlines when someone can become liable to a VAT-related penalty. A person charged with a VAT penalty may have a right of appeal; for guidance on appeal rules, see Practice Note: Appealing an HMRC decision. Civil penalties There are two broad types of civil penalties: those arising from failure to meet basic compliance obligations, and those stemming from more serious conduct or omissions This Practice Note highlights the principal penalties in each group; for a comprehensive list, consult the further reading link to De Voil Indirect Tax Service [ V5.332]. Civil penalties are issued by HMRC through assessment; for general information on assessments, see Practice Note: VAT assessments. Penalties for basic compliance failures Penalties apply where a taxpayer does not meet core VAT compliance duties, including: breach of regulations made under VATA 1994. These regulations set out detailed collection and payment rules, so most...

This Practice Note addresses the VAT treatment of supplies of land and buildings where the consideration is non‑monetary (barter arrangements). Why does this matter? Barter dealings can trigger unexpected VAT charges, and may have other unwelcome VAT effects, of which the parties should be mindful. VAT clauses in agreements concerning transactions of this nature may call for careful drafting. What to look for The issues arise where the consideration for a supply is not, or not wholly, in money; thus any cash consideration (if any) is liable to be less than one would expect to obtain for such a supply. In commercial settings, arrangements described as gifts, or agreed at a low price or low rent, will usually amount to a barter, whether or not the parties have viewed them that way. Some barter dealings, such as swapping one plot of land for another, are easy to...

This Practice Note examines VAT points to address when a lease is assigned or brought to an end. In this Practice Note, unless indicated otherwise, termination covers any form of ending a lease, including surrender, use of a break option, forfeiture, and a disclaimer in insolvency. Must the seller account for VAT?......

Example 1—disclosed agent A charity markets a challenge in which entrants cycle from London to Paris to raise money for the cause. It appoints a specialist firm to arrange the event. Acting as a disclosed agent for the tour operator, the charity earns commission per participant. The tour operator supplies flights, bikes, accommodation, meals and so on, while the charity handles promotion. Participants must secure at least £2,000 in sponsorship and pay a £200 registration fee on booking. Half of the sponsorship is due to the charity eight weeks before departure. That amount represents the event cost, which the charity remits to the tour operator, net of its 10% commission on the challenge cost (£1,000 – £200 = £800). The charity invoices the tour operator for its commission, adding UK VAT. The tour company can reclaim the VAT in the usual manner......

This Practice Note is about the . More specifically, it considers which categories of building work qualify for VAT relief, either through zero rating or by applying the reduced VAT rate. To benefit from relief, there must be both an appropriate kind of building and an appropriate scope of work. Why is that important? This is, naturally, significant to those undertaking it, but it also feeds into project appraisals, and influences whether development and investment prospects are viable. If the VAT is ultimately recoverable, it might appear unimportant whether the contractor charges it. However, even then it is crucial to ensure the correct reliefs are used, as HMRC will not reimburse VAT that should never have been paid. A final consideration is that businesses commissioning construction may, in some cases, need to account for VAT themselves under a ‘reverse charge’......