Legal Practice Notes

This Practice Note outlines: the principal corporation tax implications and consequences when a UK‑incorporated company enters an insolvent liquidation process, and certain other tax considerations which arise during the course of the liquidation process Liquidation is the process of concluding, or winding up, a company’s affairs prior to its ultimate dissolution. There are two distinct and separate forms of liquidation processes: one that applies to companies that are insolvent (ie where a company’s liabilities exceed its assets, or it is unable to pay its debts as they fall due for payment) and another that applies to companies that are solvent......

Effective preparation of bundles Meticulous bundle preparation underpins a calm, efficient hearing and is something practitioners should keep firmly in view as part of their overall work for any hearing. This Practice Note offers a guide to creating and deploying electronic bundles (or e-bundles) in civil proceedings in England and Wales. It sets out practical pointers on the interface between digital case management and e-bundles, the varieties of electronic bundle, judicial expectations when assembling electronic bundles, guidance in the Civil Procedure Rules ( CPR) on preparing bundles, effective methods for preparing and using electronic bundles, and the benefits and drawbacks of using electronic bundles. It also surveys widely applicable tools to consider when collating evidence and other documentation electronically. For general guidance on preparing a bundle for: trial—see Practice Note: Preparing trial bundles an interim application—see Practice Note: Preparing for an application hearing—...

Auction processes Auction processes are pivotal in particular industries; for example, in private equity, in government privatisations, and in other large‑value transactions, where they remain central to those transactions. Selling shares by way of auction is intended to trigger competitive bidding for the target among interested parties, achieving both the highest achievable price and securing the best possible terms. For the seller, there is strong certainty that completion will occur with a preferred bidder (which is preferable from management’s point of view). Auctions may involve numerous bidders, or be narrowed and targeted to a selected few bidders only. This will generally depend on the market in which the target company operates and the nature of its business, that is, the market it operates in and its business’s nature. Typically the seller directs the auction and appoints advisers to act for it—for instance, an...

This Practice Note addresses the initial gateway within the controlled foreign company ( CFC) rules. Where a company is a CFC for an accounting period and no entity-level exemptions apply, the CFC gateways determine whether, and to what degree, the CFC has chargeable profits. Typically, those entity-level exemptions are considered first, as several are easier to operate and can remove the entity from scope entirely. A CFC’s chargeable profits equal its assumed taxable total profits, calculated on the footing that: the CFC’s assumed total profits are confined to amounts that pass through the CFC charge gateway; and reliefs set against the assumed total profits are correspondingly restricted to mirror that cap For details on calculating a CFC charge, see Practice Note: CFC rules—calculating the CFC tax charge. Meaning of gateways The expression ‘gateway’ in the CFC regime can cause uncertainty. The core point is simple: if you wish to...

This Practice Note examines how the principal UK tax considerations arising on the formation, operation and eventual termination of a joint venture may affect the decision to proceed via a contractual arrangement, a joint venture company ( JVCo) or a partnership, and how those tax consequences can shape the preferred structure. For the purposes of this Practice Note, it is assumed that the joint venture participants are UK tax resident corporate entities and that any separate joint venture vehicle established is also UK tax resident. For information on joint ventures with a non‑ UK tax element, see Practice Note: Tax implications of international joint ventures. Types of structure available for a joint venture A joint venture is a commercial arrangement undertaken by two or more independent parties. There are no specific laws, including tax legislation, that apply uniquely to joint ventures, and the...

Updated in October 2025 Introduction China, formally the People’s Republic of China ( PRC), became a sovereign nation in 1949 and is governed by a sole political party, the Communist Party of China ( CPC). Covering roughly 9.6 million square kilometres, it is home to more than 1.4 billion people. The country comprises 23 provinces, five autonomous regions, two special administrative regions ( Hong Kong and Macau), and four municipalities under direct central administration ( Beijing, Shanghai, Tianjin and Chongqing). Beijing serves as the capital, and Mandarin is the official language. Ongoing economic and political reforms under the CPC have fostered political stability, economic freedom and legal certainty, positioning China as a top destination for foreign investment and as one of the world’s largest consumer markets. It is the world’s second-largest economy and actively pursues an open stance that promotes...

Updated November 2025 Chile stands as South America’s most economically stable nation and, per the World Bank, qualifies as a ‘high‑income economy’. It also records the region’s top economic freedom rating—22nd globally—according to the 2023 Index of Economic Freedom. This ranking signals its pro‑trade, pro‑investment stance, a clear and transparent regulatory framework, and a robust rule of law, all of which underpin sustained economic dynamism. Legal frameworks for operating in Chile Frameworks for operating in Chile In commercial practice, and under current Chilean legislation—which we outline in the next section—non‑residents have multiple avenues to invest in Chile. As a general principle, there are no restrictions on non‑residents conducting business in Chile or investing in domestic companies. Local law recognises several company forms. Owing to its versatility, the joint stock company ( Sociedad por Acciones ) is commonly preferred; however, the optimal vehicle will reflect investor...

This Practice Note sets out how to challenge a determination by Revenue Scotland concerning any of the devolved Scottish taxes. Where appropriate, it contrasts the Scottish route with the process for contesting an HMRC decision before the UK tribunals. The UK process is described in more depth in Practice Note: Appealing an HMRC decision. Be aware that strict deadlines apply throughout the appeals journey; missing any deadline can result in forfeiting the right to appeal. Moreover, Revenue Scotland’s handling of tax disagreements, encompassing litigation conduct and approaches to resolution, is anchored in the principles contained in the Revenue Scotland Settlement and Litigation Principles. It highlights comparison and distinction to assist users navigating each regime. Strict observance is essential to maintain appeal rights. For a primer on the Scottish tax tribunals, which hear appeals on devolved tax issues in Scotland, consult Practice Note:...

FORTHCOMING CHANGES : In Budget 2025, the government announced it will legislate through Finance Bill 2026 (also known as Finance ( No 2) Bill 2024–26) for the introduction of new powers for HMRC to tackle fraud committed by businesses operating within the CIS. Closely reflecting VAT provisions that restrict input tax recovery where a supplier knew, or ought to have known, that a supply was connected to fraudulent VAT evasion, the CIS reforms will include the following measures: provide for the immediate cancellation of a business’s gross payment status by HMRC, with immediate effect make the business directly responsible for any tax that has been lost enable a penalty equal to 30% of the lost tax to be imposed on the business, its directors, and other connected persons, where it can be shown the business knew, or should have known, it entered into a...

For general information about the Cayman Islands, see Practice Note: Private Client— Cayman Islands— Q& A guide for an overview of the jurisdiction. Part VIII of the Trusts Act The Cayman Islands recognises a distinctive form of non-charitable purpose trust known as a ‘ STAR Trust’. The framework enabling STAR Trusts was introduced by the Special Trusts ( Alternative Regime) Act 1997, which is the origin of the ‘ STAR’ acronym. That regime is now set out in Part VIII of the Trusts Act (2021 Revision) (the Trusts Act). This alternative regime was incorporated at Part VIII of the Trusts Act (2021 Revision), referred to here as the Trusts Act. Under section 96(1) of the Trusts Act, a STAR trust can only be established by a written instrument that expressly states Part VIII of the Trusts Act applies. An illustrative clause might read: ‘ It is...

FORTHCOMING CHANGE relating to the tax treatment of carried interest: After a call for evidence on the taxation of carried interest conducted over summer 2024, the Autumn Budget 2024 formally confirmed plans to bring in a redesigned regime for carried interest from 6 April 2026, positioned within the income tax system and accompanied by tailored provisions to reflect the reward’s distinctive attributes. A consultation then explored possible new qualifying criteria for entry to the regime, and the government published its response in June 2025. Draft legislation setting out the new carried interest rules was released on 21 July 2025, intended for inclusion in Finance Bill 2026. The regime is to apply to carried interest arising on or after 6 April 2026. These measures were reaffirmed at the 26 November 2025 Budget, which also noted that revisions had been made to the draft...

Capital reduction demergers Why a company may undertake a demerger, and the alternative ways such a split can be structured, are explained in Practice Notes: Demergers—an introduction to the tax issues and Demergers—an introduction for corporate lawyers. More detailed Practice Notes examine the tax implications associated with the main demerger routes, namely: statutory (or dividend) demergers, whether direct or indirect—see Practice Note: Statutory demergers liquidation demergers—see Practice Note: Liquidation demergers capital reduction demergers—the focus of this Practice Note In a capital reduction demerger, the top company of the target group reduces its capital; in consideration, the demerged business is moved to a new holding company, which then issues shares to the shareholders. Unlike a statutory demerger, a capital reduction demerger does not benefit from the specific tax reliefs available for exempt distributions. Even so, it can be implemented so that it does not give rise to tax...

A capital gain that would otherwise give rise to a tax charge can be reduced, or eliminated entirely, where the taxpayer has realised capital losses and can offset them against that gain. To permit set-off, the loss must qualify as an allowable loss. In this Practice Note, CGT denotes both capital gains tax and corporation tax on chargeable gains. Broadly, where a sale at a profit would trigger CGT, a sale of the same asset at a loss will produce an allowable loss. If an asset is outside CGT and is disposed of at a loss, that loss will ordinarily not be allowable. However, specific provisions allow lenders to claim an allowable loss for qualifying loans to traders that have become irrecoverable, provided the relevant conditions are satisfied. A key condition is that some principal must remain outstanding when the claim is made, which will not...

FORTHCOMING CHANGES At Budget 2025, the government set out measures to be legislated in Finance Bill 2026, namely: a reduction in the writing‑down allowance rate on main pool plant and machinery from 18% to 14%, effective 1 April 2026 for corporation tax and 6 April 2026 for income tax—affecting companies and unincorporated firms with main rate pools, covering expenditure that does not qualify for, or predates, first‑year allowances such as the super‑deduction and full expensing a new 40% first‑year allowance for qualifying main rate expenditure incurred from 1 January 2026, with fewer restrictions than other FYAs—mainly helping spend not eligible for the £1m annual investment allowance or existing FYAs (eg full expensing); available to all businesses, and covering assets used for leasing (excluding overseas leasing), but excluding cars and second‑hand assets a one‑year extension of the 100% green first‑year allowances for qualifying spend on...

Updated in December 2025 Introduction Canada offers a steady, reliable and broad-based economy. It is the fourteenth-largest globally by total GDP, has a banking sector regarded as among the safest worldwide, and ranks within the top four G20 nations for ease of starting and running a business. Over the past decade, rapid expansion has created a strong operating climate, marked by the G-7’s lowest net debt-to- GDP and its most pro-business tax regime. With advantages including swift, dependable access to the vast North American marketplace via the United States– Mexico– Canada Agreement ( CUSMA), modest operating costs and corporation tax, and a highly skilled, well-educated talent pool, Canada’s performance routinely surpasses that of many other industrialised economies. Businesses can be structured in several forms in Canada. This Practice Note sets out key issues a new business should weigh before commencing operations in Canada. It is not...

British Virgin Islands ( BVI) trusts law is set out in the Trustee Ordinance, Cap 303 (as amended) as revised from time to time, and the Virgin Islands Special Trusts Act 2003 (as amended) ( VISTA Law). A widely used application of trusts constituted under the VISTA Law ( VISTA Trusts) is the holding of shares, whether directly or indirectly, in companies undertaking trading activities. The prudent person rule Historically, and over many years, using trusts to own shares in trading companies has been significantly constrained by the common law duty of prudence concerning investments......

Tax Q& As— Brexit collection [ Archived] Tax Brexit Q& As Does the VAT Directive remain pertinent for UK taxpayers after the Brexit implementation period ends, and in what specific context?......

Updated in November 2025 Introduction This Practice Note outlines essential points a company should weigh before starting operations in Bolivia. In the 1990s, Bolivia—much like many nations—pursued a broad programme to privatise state enterprises and certain public services, introducing complementary legislation that encouraged significant foreign investment. This was especially evident across hydrocarbons, telecoms, railways, electricity, water provision and, to a lesser degree, mining. The new century began with public pushback and social unrest against these measures. In Cochabamba, privatising the water system alongside notable tariff rises sparked the so-called 'water war'. Civil and political opposition culminated in the cancellation of the concession held by a group of foreign investors. This, in turn, led to an international arbitration claim that was ultimately settled. A comparable episode followed with the water utility in the main city of La Paz. Resistance to...

The Organisation for Economic Co-operation and Development’s Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting—better known as the BEPS Multilateral Instrument ( MLI)—puts into effect those BEPS Actions that necessitate amendments to double tax treaties ( DTTs), avoiding the need to renegotiate each treaty individually. When a taxpayer intends to rely on a DTT, their adviser should review whether the pertinent article is impacted by the MLI. This is clearest where the MLI expressly adjusts a provision, such as rules on permanent establishments or hybrid entities, but it is equally vital to consider how the MLI’s treaty abuse provisions might influence access to other treaty advantages. For instance, although the MLI does not rewrite treaty articles on dividends or interest, the principal purpose test can still withhold benefits those articles might otherwise grant. The UK, in common with...

THIS PRACTICE NOTE APPLIES IN RELATION TO OCCUPATIONAL PENSION SCHEMES What are additional voluntary contributions? Additional Voluntary Contributions ( AVCs) are contributions that members of occupational pension schemes choose to pay, beyond those required by the scheme rules, which therefore give the member extra benefits on top of the basic benefits of the relevant scheme. The nature of benefits funded by AVCs is determined by the scheme’s rules. They may provide extra defined benefits (often referred to as ‘added years’), but in most instances AVC entitlements build up on a money purchase basis. Why distinguish them from other contributions? For several purposes the contributions, and the benefits purchased with them, are treated as a distinct class separate from normal contributions and benefits. In some areas this produces more restrictive treatment than applies to other benefits; in others, more favourable rules apply. Notably, on a winding up of the...