Legal Practice Notes

Property development Within the real estate arena, development activity is fundamental for all participants, whether they are specialist developers or owners enhancing their own investment properties. Projects may range from light refurbishment and substantial alterations through to entirely new construction. Although those undertaking these activities are typically taxed under the ordinary rules, certain provisions apply specifically to property development. Development can be for commercial purposes, for residential use, or a mix of both, for example where flats are created above commercial space at street level. Many of the issues arising for commercial and residential schemes are similar, though notable differences do exist. For any project, it is necessary to evaluate indirect tax as well as direct tax. This Practice Note looks at the direct tax considerations that arise in particular on the development of land for residential use. The focus is on...

Devolution describes the transfer of decision-making and governance to subordinate tiers of the state within the nation-state. Domestically, in the UK context, it means granting the smaller nations their own distinct governmental and parliamentary arrangements. This Practice Note outlines the relevant statutory law-making institutions established in Scotland, Wales and Northern Ireland. Brexit impact—devolution UK devolution interacts intricately with EU law and competences, so it is affected by the UK’s departure from the EU. For general updates on the process and preparations for Brexit, refer to Practice Note: Brexit timeline. For more on how Brexit bears on devolution, see News Analysis: Examining the impact of Brexit and UK-wide common frameworks on devolution. Devolved institutions and their law-making powers Each of Scotland, Wales and Northern Ireland has a single-chamber legislature of elected members, with some members also serving as Ministers carrying out executive functions as part of their...

FORTHCOMING CHANGE relating to the modernisation of stamp taxes on shares framework: Stamp duty and SDRT are set, in 2027, to be replaced by a single, self-assessed levy on securities, the securities transfer charge ( STC), which will be paid and reported via a new online portal service. The core design of the STC will broadly mirror the proposals for that regime set out in the consultation carried out in 2023. Finance Bill 2026 ( FB 2026) creates a power, commencing on Royal Assent, to permit secondary legislation so that taxpayers can pilot the new digital service by self-assessing their stamp taxes on securities liabilities and submitting transactions electronically through a digital system. For more detailed information on the modernisation of stamp taxes on securities, see News Analyses: Budget 2025— Tax analysis— Stamp and transfer taxes, Tax update spring 2025— Stamp taxes on shares...

Asset sale In an asset sale, the purchaser chooses and acquires from the vendor only the assets and liabilities it intends to take on. At times, an asset sale involves disposing of a whole business (that is, all assets comprising, and used within, that undertaking) or a segment of a business, and at other times it is the transfer of a single asset or a bundle of assets......

FORTHCOMING CHANGES : At Budget 2025, the government confirmed it will legislate via Finance Bill 2026 (also referred to as Finance ( No 2) Bill 2024–26) to introduce measures aimed at promoters or enablers of marketed tax avoidance. These proposals appear in Part 6 of the Bill, as introduced on 4 December 2025, and include: Updates to the DOTAS and DASVOIT civil penalty regime, enabling HMRC to issue DOTAS penalties directly without needing tribunal approval; A general ban on promoting marketed arrangements that have no realistic prospect of success, plus a ban on promoting arrangements identified in universal stop regulations ( USRs). Breaching either ban could trigger sanctions including publication, financial penalties, and criminal prosecution; Promoter action notices ( PAN), compelling businesses to stop supplying goods or services to tax avoidance promoters where those goods or services are used to promote avoidance and the promoter is in breach of a USR or a...

Practice Note: Loan relationships—the main tax rules As set out in detail in the above Practice Note, the default position is that a company’s credits and debits—broadly, profits and losses—arising from its loan relationships are recognised for corporation tax within the loan relationships regime by reference to the company’s accounting profit and loss, as shown in its relevant accounts prepared in accordance with generally accepted accounting practice ( GAAP). Put differently, GAAP-based accounts determine whether amounts exist, how they are measured and when they arise for taxation in relation to those loan relationships for corporation tax purposes. This is often summarised as ‘tax follows the accounts’. The statutory rules are found principally in Part 5 of the Corporation Tax Act 2009 ( CTA 2009) (ss 292–476), with additional provisions contained in Part 6 ( CTA 2009, ss 477–569). There are,...

ARCHIVED: This archived Practice Note is no longer being updated. It monitored the Bill’s journey through Parliament until enactment, drawing out notable milestones and documents, including published amendments, that were material to the legislation’s progression. It is kept for historical reference. The Criminal Finances Bill ( CFB) finished its parliamentary stages and obtained Royal Assent on 27 April 2017. The Criminal Finances Act 2017 ( CFA 2017) introduced substantial revisions to the Proceeds of Crime Act 2002 ( POCA 2002) and other statutes, including the Terrorism Act 2000 ( TA 2000); these allow enforcement bodies to more effectively pursue and seize criminal proceeds and terrorist financing. It also created corporate criminal liability for failing to prevent the facilitation of tax evasion and brought in other offences linked to the power to make unexplained wealth orders ( UWOs). The Act further widened the powers...

The Criminal Finances Act 2017 ( CFA 2017) The CFA 2017 created a corporate offence for failing to prevent the facilitation of tax evasion, taking effect on 30 September 2017. The government has published guidance detailing its expectations for compliance systems, and this Practice Note reflects both the legislation and that guidance. The guidance should be applied proportionately and on a risk-led basis, taking into account the size, nature and complexity of your organisation. Smaller organisations in low-risk sectors may reasonably adopt more modest measures. Large multinational businesses operating in high-risk areas may need far more robust controls. The government accepts that a proportionate, risk-based approach cannot deliver a zero-failure regime. Where you can show that reasonable prevention procedures are in place to identify and mitigate risks of facilitating tax evasion, prosecution is unlikely because you will be able to rely on a...

Background This archived Practice Note examined the effect and implications of the coronavirus ( COVID-19) pandemic on the preparation and filing of a company’s report and accounts. It has not been updated or otherwise revised since May 2022. Disclosure of principal risks The Companies Act 2006 ( CA 2006), the UK Corporate Governance Code ( UKCG Code) and the Disclosure Guidance and Transparency Rules ( DTRs) contain overlapping requirements obliging companies to disclose the principal risks facing their business in both annual and interim financial reports: the CA 2006 requires all UK incorporated companies (except for small companies) to prepare a strategic report for each financial year of the company. This report must include, among other things, ‘a fair review of the company’s business, and a description of the principal risks and uncertainties facing the company’ the UKCG Code requires the board of a...

ARCHIVED : This Practice Note has been archived and is not maintained. This Practice Note outlines the principal temporary alterations to company filings and related administrative processes arising from the coronavirus crisis. On 26 March 2021, Companies House confirmed that the automatic extensions under the Corporate Insolvency and Governance Act ( CIGA) 2020, which covered deadlines from 27 June 2020 to 5 April 2021 to ease pressure on companies during the coronavirus ( COVID-19) pandemic, would cease for any deadlines falling after 5 April 2021. These temporary allowances were designed to relieve the burden on companies during the coronavirus pandemic, but would not apply to any filings due beyond that point thereafter. From 6 April 2021 onwards, confirmation statements, accounts and event‑driven filings would no longer benefit from automatic extensions; any deadlines landing after that date revert to the usual timetable. Regarding mortgage charges, where an...

ARCHIVED: This archived Practice Note, which reviews the tax measures introduced by the government in response to the coronavirus pandemic and other tax steps of particular relevance, is not updated and is provided for background information only The government introduced a series of measures in response to the coronavirus ( COVID-19) crisis, either specific to the UK tax regime or administered by HMRC. HMRC also published a business support finder tool to help businesses and the self-employed swiftly identify what financial assistance was available. See: Find coronavirus support for your business. For ease of use, this Practice Note is divided into: EMPLOYMENT SELF- EMPLOYMENT TRADING LOSSES VAT STAMP TAXES INTERNATIONAL TAXES MANAGEMENT AND LITIGATION INCENTIVISED...

This Practice Note explores the tax position of investors in open‑ended investment companies ( OEICs) and authorised unit trusts ( AUTs) who fall within the scope of UK corporation tax—namely UK‑resident companies and non‑ UK resident companies trading through a UK permanent establishment. These investors are described here as ‘corporate investors’. Note that bespoke provisions, not addressed in this Practice Note, may apply where the investor is an insurance company or a financial trader. In statute, OEICs and AUTs are jointly defined as authorised investment funds ( AIFs). The main provisions that determine how AIFs and their investors are taxed appear in the Authorised Investment Funds ( Tax) Regulations 2006 ( SI 2006/964) (the AIF Tax Regulations). For: what OEICs and AUTs are and an outline of the relevant regulatory framework, see Practice Note: Tax and authorised investment funds—what are they?......

The rules that make up the corporate interest restriction ( CIR) are extensive and intricate. To help readers, this Practice Note sets out the meanings of key terms and concepts used across the CIR legislation. Readers are referred to: Practice Note: Corporate interest restriction—quick guide for an introductory guide to the CIR and why it was introduced Practice Note: Corporate interest restriction—the main rules for a detailed look at the main operative provisions of the CIR Practice Note: Corporate interest restriction—administration for the more procedural aspects of the CIR, including the interest restriction return Practice Note: Corporate interest restriction—elections for the different elections that a group can make in their interest restriction return The CIR has applied from 1 April 2017 and the principal rules are contained in Part 10 of the Taxation (...

This Practice Note describes the basic rules which determine how gains and losses arising from a company’s intangible fixed assets ( IFAs) are computed and then brought into account for corporation tax purposes under the corporate intangible assets regime in Part 8 of the Corporation Tax Act 2009 ( CTA 2009) In broad terms, within the corporate intangible assets regime, the tax position of IFAs: is anchored to accounting gains and losses recognised in, or set against, profits in the company’s accounts prepared in accordance with generally accepted accounting principles......

Tax following the accounts The general position under the corporate intangible assets regime in Part 8 of the Corporation Tax Act 2009 ( CTA 2009) is that a company’s gains and losses on intangible fixed assets ( IFAs) are recognised and brought into corporation tax as credits and debits in line with the accounting treatment of those IFAs. In short, accounts prepared in accordance with generally accepted accounting practice ( GAAP) provide the foundation for determining the taxable and relievable items and amounts relating to a company’s IFAs. This is commonly known as ‘tax following the accounts’. There are, however, various exceptions to this overarching approach where the corporate intangible assets provisions require a move away from the accounts, mandating that IFA credits and debits are calculated on a different footing. For broader guidance on the tax treatment of IFAs, see Practice Note: How...

Capital gains—intra-group asset transfers Companies within a single capital gains group can shift assets among themselves without incurring corporation tax on chargeable gains ( CGT), see Practice Note: Capital gains—intra-group asset transfers. To stop groups exploiting these reliefs to sidestep tax when disposing of assets that would otherwise trigger a substantial CGT charge, anti-avoidance rules are necessary. Rather than selling the asset outright, a group could pass it internally—probably to a company formed specifically for that purpose—and then dispose of the shares in that company. This device is commonly called the envelope trick and is outlined in more detail below. The statutory rules that block use of the envelope trick are the degrouping rules, set out in section 179 of the Taxation of Chargeable Gains Act 1992 ( TCGA 1992). The capital gains degrouping provisions can apply even where no avoidance is intended in...

A company is a controlled foreign company (a CFC) if it is: a company that is not resident in the UK, and controlled by individuals who are resident in the UK......

Connected persons Capital gains rules contain targeted measures for people who are connected with each other. These fall into two main strands: rules for dealings between connected persons; and rules that, in effect, treat a taxpayer together with their connected persons as one economic unit The first strand includes the market value requirement, limits on the use of capital losses, and the treatment of linked transactions (each outlined below). These measures aim to stop manipulation of the capital gains regime—for example, generating artificial capital losses by transferring an asset for little or no consideration to a family member, or to a company that the taxpayer controls. The second strand is found throughout the capital gains legislation. One illustration is the value shifting provisions, which apply where a tax‑free benefit has been conferred either on the person disposing of an asset, or on someone...

Although the Taxation of Chargeable Gains Act 1992 ( TCGA 1992) does not prescribe a method for calculating a capital gain (termed in the statute a chargeable gain), the commonly followed method is to: take the consideration received on disposing of an asset deduct specified costs (called allowable expenditure or ‘base cost’), notably the original acquisition price of the asset, and where the taxpayer is a company and it obtained the asset on or before 31 December 2017, deduct any indexation allowance The outcome of this computation is the chargeable gain. This Practice Note offers a brief overview of consideration, allowable expenditure and (where relevant) indexation only. For the meanings of disposals and assets for capital gains tax ( CGT) purposes, see the separate Practice Note: What is a capital gain? In this Practice Note CGT is used throughout as a shorthand for both CGT and...

Migration Migration describes a company moving its tax residence from one territory to another. There are various motivations for doing so. In the past, certain businesses shifted abroad to reduce exposure to UK tax and to benefit from lower rates elsewhere. Yet reforms enhancing the UK’s standing as a holding company jurisdiction have diminished that incentive. Conversely, commercial circumstances may mean a company is incorporated in the UK but tax resident in a different country, for instance where every director is based in that other country. For a discussion and comparison of the issues in selecting the tax jurisdiction for a corporate group’s holding company, see Practice Note: Holding company jurisdictions—tax considerations. In practice, multiple approaches exist by which a UK tax resident company (or a group) might depart the UK (or reorganise to deliver an equivalent outcome for tax purposes). Such...