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This Practice Note outlines the law concerning criminal recklessness. The subjective test for recklessness Certain statutory and common law offences allow the prosecution to prove mens rea through ‘recklessness’. Put simply, recklessness is where the accused takes an unjustified risk that results in unlawful harm or damage. The House of Lords in R v G reaffirmed the subjective approach to recklessness. Before R v G, two distinct tests were used, depending on the offence charged: Subjective recklessness from R v Cunningham: the prosecution had to establish that the accused personally foresaw the risk. Objective recklessness from R v Caldwell: the prosecution only needed to show that the risk would have been obvious to a reasonable person, without proving the accused themselves foresaw it. In R v G, the House of Lords concluded that the objective test could operate unfairly where a defendant did not foresee the
This Practice Note examines the remedy of rescission, explaining when and in what manner a contract can be unwound (at common law, in equity and under statute) and thereby terminated and brought to an end. It covers the consequences and effects of rescission, the principal grounds for setting aside an agreement (misrepresentation, mistake, undue influence, duress, non‑disclosure, fiduciary misdealing and bribery) and the main obstacles to claiming rescission—affirmation, the intervention of third‑party rights and the impossibility of restitution. For further guidance on rescission in the context of misrepresentation, see Practice Note: Misrepresentation—rescission as a remedy. There are many ways in which a contract may reach its end; see: Terminating contracts—how and when a contract ends—overview for a brief and accessible summary, with links to the related further practical guidance, including Practice Note: Termination and expiry of contracts. For a table
What is a res judicata? A res judicata is a determination by a court or tribunal with jurisdiction over the cause of action and the parties, which finally disposes of the issues decided so they cannot be litigated again by those bound, save on appeal. Final judgments entered by default or by consent fall within this concept, whereas rulings on purely procedural points and any decision lacking finality do not. The doctrine’s aim is to bring litigation to an end and shield parties from being harassed by the same dispute twice. in personam—binds the parties and their privies in rem—binds all persons, privy or otherwise (ie a judgment binding the whole world) A party may rely on res judicata: as an estoppel to defeat an opponent’s claim or defence; and/or as the basis of their own claim or
The offence of causing grievous bodily harm with intent Wounding or causing grievous bodily harm (GBH) with intent can be tried solely in the Crown Court on indictment. Elements of the offence Under the Offences against the Person Act 1861 (OATPA 1861), the prosecution must establish that the defendant unlawfully and maliciously: wounded with the intention of causing GBH, or caused GBH with that intention, or wounded intending to resist or prevent the lawful arrest or detention of any person, or caused GBH intending to resist or prevent the lawful arrest or detention of any person ‘Unlawfully’ and ‘maliciously’ Unlawfully The wounding or causing of GBH must be unlawful. Such conduct may be lawful if used: in self-defence in defence of another in defence of property for the prevention of crime where the victim gave express or implied consent For further information on these defences, see below:
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Under the corporate intangible assets rules in Part 8 of the Corporation Tax Act 2009 ( CTA 2009), the default position is that profits and losses relating to a company’s intangible fixed assets ( IFAs) are calculated and recognised as credits and debits for corporation tax purposes, in step with the accounting treatment applied to those IFAs. In other words, a company’s accounts, drawn up in line with generally accepted accounting practice ( GAAP), provide the platform from which the taxable and relievable items and the relevant amounts relating to the company’s IFAs are determined. This principle is often termed ‘tax following the accounts’. The effect of the tax-follows-the-accounts approach is that, where an accounting loss is recognised in arriving at a company’s profit and loss in respect of capitalised expenditure incurred to create or acquire an IFA, whether through...
This Practice Note discusses the two ‘failure to prevent’ corporate criminal offences created by the Criminal Finances Act 2017 ( CFA 2017): CFA 2017, s 45 establishes the offence of failing to prevent the facilitation of a UK tax evasion offence(s) ( UK tax evasion facilitation offence) CFA 2017, s 46 establishes the offence of failing to prevent the facilitation of a foreign tax evasion offence(s) (foreign tax evasion facilitation offence) Both offences impose strict liability, with a ‘reasonable procedures’ defence for those able to show they maintained reasonable procedures designed to prevent facilitation of the underlying tax evasion offences. This Practice Note explains the components of each offence and the defences introduced by the CFA 2017. The offences sit within a broader suite of measures aimed at combating tax evasion and its facilitation, both in the UK and worldwide. They are...
This Practice Note reviews how the Foreign Account Tax Compliance Act ( FATCA) applies to UK trusts, implemented domestically by the International Tax Compliance Regulations 2015, SI 2015/878. For a broader overview of FATCA, see Practice Note: US: Foreign Account Tax Compliance Act ( FATCA)—summary, which provides further detailed guidance. Where the trust is a pension fund, see Practice Note: Automatic Exchange of Information ( AEo I) in the UK—pension schemes. Where the trust is an employee benefit trust, see Practice Note: Automatic Exchange of Information ( AEo I) in the UK— Employee incentive arrangements. What is FATCA and how does it affect UK Trusts? FATCA is US legislation intended to curb tax evasion involving US taxpayers’ offshore assets. This Practice Note addresses the impact of FATCA on trusts situated in the UK and highlights the principal issues. It does not extend to...
This Practice Note provides a broad overview of: the intergovernmental agreement between the UK and the US to enhance international tax compliance and to give effect to FATCA, signed on 12 September 2012 (the UK: US IGA), and the International Tax Compliance Regulations 2015, SI 2015/878 (the International Tax Compliance Regulations), insofar as they relate to implementing the UK: US IGA The International Tax Compliance Regulations took effect on 15 April 2015. They supersede and repeal the International Tax Compliance Regulations ( United States of America) Regulations 2014, SI 2014/1506, which were in force from 30 June 2014 until 14 April 2015. The International Tax Compliance Regulations and the UK: US IGA comprise detailed and demanding provisions. This Practice Note is a summary and does not address every facet of the framework. In certain sections, it necessarily adopts a...
STOP PRESS/ FORTHCOMING CHANGES : The UK intends to bring the OECD’s Cryptoasset Reporting Framework ( CARF) into domestic legislation, taking effect from 1 January 2026. The implementing instrument is the Reporting Cryptoasset Service Providers ( Due Diligence and Reporting Requirements) Regulations 2025 ( SI 2025/744), formally presented to the House of Commons on 25 June 2025. On the same date, HMRC released official tax impact and information notes ( TIIN) for the measure. HMRC has additionally also issued public guidance on reporting under the CARF. The government has likewise introduced new legislation revising the existing domestic law implementing the OECD’s Common Reporting Standard ( CRS) and the UK’s obligations under the Intergovernmental Agreement with the US for the implementation of the US Foreign Account Tax Compliance Act ( FATCA). The principal legislation is the International Tax Compliance Regulations 2015 ( SI...
The Corporation Tax Act 2009 ( CTA 2009) contains the loan relationships regime, which governs how a company’s profits and losses from its ‘loan relationships’ are taxed and relieved. For what constitutes a ‘loan relationship’, and the other dealings and arrangements that, while not ‘loan relationships’, are still brought within the loan relationships rules, see Practice Note: Loan relationships—what are they? This Practice Note sets out how such profits and losses are calculated and then recognised for corporation tax purposes. The principal legislative provisions on loan relationships sit in CTA 2009, Pt 5 (ss 292–476), with further rules in CTA 2009, Pt 6 (ss 477–569). HMRC’s guidance is available in the Corporate Finance Manual starting at CFM30000. For an outline of the accounting concepts relevant to the taxation of loan relationships, refer to Practice Note: Loan...
In certain corporate takeovers, the purchaser may arrange the deal so that the price is satisfied by issuing new shares and/or loan notes in the acquiring company. Rather than, or in addition to, receiving cash, the vendor shareholders swap their existing shares (or loan notes) for fresh shares and/or loan notes created by the corporate buyer. This Practice Note explains the tax consequences for the selling shareholders and the acquirer in such arrangements. It covers both parties’ positions under the relevant tax rules. This method of acquisition plainly offers a cash flow benefit to the buyer and, provided specific conditions are met, the securities exchange is also treated as a reorganisation for tax purposes. Consequently, no capital gains tax (or corporation tax on chargeable gains) is due from the selling shareholders at the point they dispose of their shares. Where the...
FORTHCOMING CHANGES: At Budget 2025, the government confirmed Finance Bill 2026 measures: Main pool writing‑down allowances fall from 18% to 14% from 1 April 2026 ( CT) and 6 April 2026 ( IT), impacting companies and unincorporated businesses, including pre‑ FYA expenditure. A 40% first‑year allowance for qualifying main rate spend incurred from 1 January 2026, with fewer restrictions than other FYAs; it mainly helps costs outside the £1m AIA or existing FYAs, applies to all businesses, includes assets used for leasing (not overseas), and excludes cars and second‑hand assets. 100% green FYAs for zero‑emission cars and EV charging points extended to 31 March 2027 ( CT) and 5 April 2027 ( IT). The Practice Note outlines section 198/199 CAA 2001 elections for fixtures transferred on property sales or new leases. Default treatment is a just and reasonable...
Secondary liabilities UK tax legislation includes a range of rules under which one individual can be held accountable for another’s tax debt; these are referred to as secondary liabilities. This Practice Note concentrates primarily on secondary tax liabilities that may arise on the sale of a company, with implications for both parties to the transaction. For instance, the target could become secondarily liable due to a default elsewhere within the seller’s group. A buyer will be reluctant to shoulder that expense and will therefore seek protection by pursuing a claim under the tax covenant or warranties to safeguard its position. The target might also incur primary liabilities that crystallise after it joins the buyer’s group but which relate back to periods when it belonged to the seller’s group. In such cases, members of the seller’s group may themselves face secondary tax...
This Practice Note examines what is meant by chargeable consideration, the concept that sets the level of stamp duty land tax ( SDLT) payable on a chargeable transaction. For guidance on what constitutes a chargeable transaction, consult Practice Note: Land transactions, chargeable interests and chargeable transactions. For treatment of chargeable consideration in relation to leases, see Practice Note: SDLT-common lease transactions. From 1 April 2015, SDLT no longer applies to any land transaction involving any interests in or over land in Scotland. From that date, land and buildings transaction tax ( LBTT) applies to those transactions, subject to transitional provisions. Accordingly, any references in this Practice Note to ‘ UK land’ or similar terms, where SDLT is in point, should be interpreted as excluding interests in or over Scottish land from 1 April 2015. For more information, refer to the LBTT...
Anti-avoidance rules in Part 14 and Part 14A of CTA 2010 This Practice Note outlines the anti-avoidance provisions set out in Part 14 and Part 14A of the Corporation Tax Act 2010 ( CTA 2010), which operate when a change of company ownership occurs. Part 14 (the Part 14 rules) targets arrangements whereby a profitable organisation reduces its corporation tax liability by acquiring a company with accumulated losses and offsetting those losses against its own profits. This approach is often called loss-buying (not to be confused with the rules on purchasing capital losses; see Practice Note: Pre-entry capital losses). While Part 14 restricts the utilisation of losses already crystallised after a takeover, Part 14A of CTA 2010—the transfer of deductions targeted anti avoidance rule ( TAAR)—extends this principle to unrealised expenses (ie items not yet recognised for tax). In broad terms, these rules stop a...
When staff move with the undertaking in which they work under the Transfer of Undertakings ( Protection of Employment) Regulations 2006 ( TUPE), SI 2006/246, there are numerous employment tax implications to be assessed and considered, including: PAYE obligations National Insurance contribution ( NICs) liabilities The tax treatment of payments made to employees on the transfer Where transferring staff hold share incentives, those arrangements require particular care and scrutiny. For further detail and guidance, see Practice Note: Transfer of Undertakings ( Protection of Employment) Regulations 2006 ( TUPE) and share incentives. This Practice Note does not address the non-tax aspects of a TUPE transfer, as these matters are also comprehensively covered within the TUPE subtopic; see: TUPE and asset purchases—overview. PAYE obligations Under the PAYE regime, employers must deduct tax from relevant payments to employees. On a TUPE transfer, because two separate entities will occupy the employer role (albeit at...
Overview of potential IHT charges When setting up or running an employee benefit trust ( EBT), it is essential to assess the likelihood of Inheritance Tax ( IHT) liabilities. Consider the following: Does the EBT satisfy section 86 of the Inheritance Tax Act 1984 ( IHTA 1984), making it a section 86 trust? Does the EBT include any sub-trusts and, if so, does it still fall within section 86? Is the company providing funds to the EBT a close company? In what manner will beneficiaries receive value from the EBT? Inheritance tax issues for the trustees of an EBT As a broad principle, assets held in a discretionary arrangement such as an EBT come within the IHT framework. Where a charge to IHT arises, the trustees of the settlement are responsible for payment. That said, employee trusts which satisfy the detailed...
When a dispute is resolved by a payment of damages or compensation, whether arising from a court order or an out-of-court settlement: the recipient (the claimant) will wish to establish if the amount is taxable, and the payer (the defendant) will wish to know whether any tax relief can be claimed This Practice Note examines those two issues in turn, in relation to direct UK taxes. The parties must also determine if the payment attracts VAT, which is addressed in Practice Note: VAT treatment of damages and compensation payments. Tax considerations may additionally be relevant to calculating the amount of the damages or compensation payment, as discussed in Practice Note: The effect of tax on the quantum of damages. Tax reliefs apply to payments made by public authorities under certain specified compensation schemes, including the Windrush Compensation Scheme and the Post Office Horizon...
FORTHCOMING CHANGE : On Tax Administration and Maintenance Day, 27 April 2023, the previous Conservative government issued a summary of responses to its 2021 call for evidence, ‘ Modernising debt collection for non-paying businesses’. That summary indicates an initial consultation will concentrate on four of the six original proposals, including a plan to broaden direct recovery of tax debts ( DRD) to cover digital wallets. Before consulting on these measures, HMRC will build an evidence base on the extent of serial non-payment and evaluate existing legal obstacles to widening these powers. The summary also notes the government will determine the most appropriate time to consult. For further details, see News Analysis: Tax Administration and Maintenance Day—27 April 2023. DRD refers to HMRC’s ability to direct banks and building societies (ie deposit-takers) to remove funds to settle taxpayers’ liabilities straight from their bank...
When someone acquires the share capital of a company, the deal is commonly described as one of the following: a completion accounts deal an accounts date deal a locked box deal Each label captures how the parties set or refine the purchase price for the target and affects the extent to which the buyer is safeguarded against historic tax exposures under the tax covenant (also called a tax deed). In virtually every transaction, a headline price for the shares is agreed first. That figure is then adjusted using an agreed approach—the most prevalent being completion accounts, accounts date, or locked box. For more detail on the purpose and effect of a tax covenant, see Practice Note: Why have a tax covenant? Completion accounts Under a completion accounts deal, the consideration is adjusted by reference to a set of accounts prepared as at the...
This Practice Note sets out the rules that, with effect from 8 July 2015 (or 15 July 2015 for corporate partners): bar banking companies from deducting specified compensation outgoings for tax purposes, and require an amount equal to 10% of the non-allowable compensation to be brought into the banking company’s taxable profits This Practice Note does not address the recipient’s tax position on bank compensation. That question has been examined in cases including O’ Neil v HMRC and Hackett v HMRC. For further detail, see Practice Note: Direct tax treatment of damages and compensation payments. Reasons behind the rules The government introduced measures denying relief for banks’ compensation payments and treating banks as receiving a notional trade receipt of 10% of the disallowed amount, in order to: ‘protect the Exchequer from banks’ past management failures’, and ‘ensure the [banking] sector makes an...
Migration Migration concerns a change in a company’s tax residence. A business might choose to migrate for numerous reasons: its fiscal profile in the current jurisdiction, or its capacity to secure relief under double tax treaties ( DTTs). Equally, shifts in a company’s operations or governance can make an alteration of tax residence necessary or beneficial. For an outline and comparison of the factors when selecting a tax jurisdiction for a corporate group’s holding company, see Practice Note: Holding company jurisdictions—tax considerations. In practice, there are several routes by which a UK tax resident company (or group) may move from the UK, or restructure to reach an equivalent outcome for tax purposes. As set out below, these include: direct emigration—where a UK tax resident company relocates its tax residence outside the UK corporate inversion—by inserting a new, non- UK resident holding company above the...
FORTHCOMING CHANGE relating to UK transfer pricing legislation Finance Bill 2026 (as introduced) contains provisions delivering a range of changes to the UK’s transfer pricing legislation. Once enacted, with effect for accounting periods beginning on or after 1 January 2026, the package will, among other matters: remove UK‑to‑ UK transfer pricing, subject to carve‑outs intended to prevent opportunities for tax arbitrage amend and clarify the participation condition make clear that the OECD Model Tax Convention and the OECD Transfer Pricing Guidelines are to be used as interpretative aids introduce several amendments to the rules governing financial transactions to better align the UK position with the OECD Transfer Pricing Guidelines Alongside this, the government announced at Budget 2025 that it will proceed with an annual requirement for in‑scope multinationals to report information on cross‑border related party transactions for accounting periods...
Principal private residence relief ( PPR relief) removes some or all of the gain arising on the sale or disposal of an individual’s dwelling-house from capital gains tax ( CGT) where the property was their sole or principal residence at any time during their ownership period. UK-resident taxpayers may claim PPR relief on the disposal of a UK or a non- UK residence. Individuals who are not UK resident may claim PPR relief on the disposal of a UK dwelling-house. From 6 April 2015, a residence will not qualify for PPR relief in a tax year unless the individual either: was resident, in that tax year, in the country where the dwelling-house is situated; or spent at least 90 nights in the dwelling-house (or in dwelling-houses within the same country) during that tax year. Principal private residence relief: the basics In general, gains realised on the...
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When evaluating a general damages claim, the practitioner ought initially to refer to the Judicial College Guidelines (JCG)...
This Practice Note This Practice Note reviews mechanisms used in settling litigation. A Tomlin order consists of a consent order paired with a schedule. It operates to stay proceedings on terms that have been agreed. The provisions contained in the schedule may remain confidential. This Practice Note describes the scope of confidentiality attaching to the schedule and sets out how it differs from a standard consent order. Sample wording for a Tomlin order is included, alongside links to precedents, as well as guidance on court approval. It also addresses varying, setting aside and enforcing a Tomlin order, including the considerations the court will take into account when handling applications for each. Further guidance is provided on interpreting and applying the relevant provisions of the CPR; however, some courts and divisions impose very specific requirements for both drafting and approval, and for approaching the schedule and confidentiality issues. Accordingly, you must consider the particular rules and court guide provisions in the forum where your claim is proceeding when drawing up the Tomlin order...
Date [ date ] Parties [ name of Landlord ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Landlord) [ name of Tenant ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Tenant) [ [ name of Guarantor ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Guarantor) ] [ [ name of Mortgagee ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Mortgagee) ] Definitions Within this Deed, the terms below shall be interpreted as follows: [ Annual Rent • the annual sum reserved under the Lease; ] [ Insurance Rent • the Tenant’s share of the Landlord’s costs of insuring the Property (as set out in the Lease); ] Lease • the lease of the Property dated [ date ], entered into between (1) [ the Landlord OR [ name ...
I, [ name ], of [ address ], solemnly and sincerely state that: [ Matters to be verified, set out in numbered paragraphs ] I make this solemn statement in good conscience, believing it to be true, and pursuant to the provisions of the Statutory Declarations Act 1835. DECLARED at [ details ] this [ day ] day of [ month and year ] Before me ................................................................................ [ signature of the person before whom the declaration is made ] A [ commissioner for oaths OR [ solicitor OR [ insert other qualification ] ] authorised to administer oaths ]...
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