Legal Practice Notes

Introduction The government’s approach to tackling offshore tax evasion was first outlined in HMRC’s No Safe Havens 2014 and later expanded in No Safe Havens 2019. The 2014 strategy aimed to ensure that: no jurisdiction offers UK taxpayers a haven to conceal income or assets from HMRC potential offshore evaders recognise the risk now lies firmly against them evaders come forward, settle the tax due and stay compliant those who refuse to disclose are identified and face robustly enforced sanctions facilitators of offshore evasion find no refuge On the first two aims, the Common Reporting Standard ( CRS) delivered an unprecedented shift in tackling offshore evasion through the automatic, greatly expanded exchange of taxpayer information across borders. For further detail on the CRS, see Practice Note: Automatic exchange of information—the Common Reporting Standard: a...

ARCHIVED: This Practice Note is archived and not maintained. It outlines the Finance Act 2016 ( FA 2016), which secured Royal Assent on 15 September 2016. Retained for historical interest, it traces the legislation’s passage through Parliament and sets out, with relevant links, each measure contained in the Act. This Practice Note is divided into four parts: Progress of FA 2016 FA 2016—measure by measure Items included in the Draft Finance Bill on 9 December 2015 but not in FA 2016 Items that were expected to be included in FA 2016 Progress of FA 2016 This section records how FA 2016 progressed through Parliament. 9 December 2015 — Draft legislation published 14–29 January 2016 — Lords Select Committee: inquiry into the draft FB 2016 9 December 2015–3 February 2016 — Consultation on draft clauses to be included in FB 2016 24 March 2016 — FB 2016 published ( Bill as...

For wider background on Guernsey, see Practice Note: Private client— Guernsey— Q& A guide. Guernsey as a trust jurisdiction Although Guernsey acknowledged the trust concept as early as the eighteenth century, the island’s modern trust services industry took shape in the 1960s and 1970s, prompted by foreign exchange controls, tax and succession planning, and the movement of wealthy residents. It has since adapted to serve an increasingly mobile international client base and to meet a changing international regulatory environment, and now hosts approximately 150 professional licensed fiduciaries (based on primary licensee statistics), spanning large international firms through to independent boutique companies. Trusts were commonly created in Guernsey before the Trusts ( Guernsey) Law, 1989 (the 1989 Law), as evidenced by statutes and court decisions. The 1989 Law affirmed the validity of both Guernsey and foreign trusts and set out the principles applying to them. It has been...

The senior accounting officer ( SAO) regime Brought in by Schedule 46 to the Finance Act 2009 ( FA 2009), the SAO regime seeks to ensure qualifying companies have suitable tax accounting arrangements so that correct tax liabilities are reported to HMRC. The rules apply to financial years commencing on or after 21 July 2009. To satisfy the SAO rules, an SAO, in relation to each qualifying company for which they act, must: perform the main duty during every financial year (or for the relevant part of any year) in which they are the company’s SAO; and send HMRC, after the close of each relevant financial year, a certificate addressing the suitability of the tax accounting arrangements of the company or companies concerned This Practice Note: sets out the particular duties and responsibilities that make up an SAO’s main duty to take...

The senior accounting officer ( SAO) regime, set out in Schedule 46 to the Finance Act 2009 ( FA 2009), aims to ensure that qualifying companies maintain adequate tax accounting systems and controls in place so that the correct tax liabilities are reported to HMRC. The regime applies to financial years commencing on or after 21 July 2009......

A stricter penalty framework applies to an individual’s tax position where non-compliance concerns an offshore matter or an offshore transfer, with heightened consequences. This Practice Note covers the following: the definition of offshore matter and offshore transfer requirement to correct and failure to correct penalties penalties for offshore matters or offshore transfers penalties for moving offshore assets asset-based penalties This Practice Note addresses matters specific to the civil penalties and sanctions arising from offshore tax non-compliance, in particular. For the general penalty framework, see: Tax penalties, interest and time limits—overview, which signposts more detailed material and resources. For guidance on measures targeting offshore tax evaders committing a criminal offence, those enabling offshore tax evasion, or companies and other relevant entities facilitating UK and offshore tax evasion, see Practice Note: Offshore penalties, sanctions and criminal...

This practice note concerns defined benefit occupational pension schemes. What is a section 75 debt? Sections 75 and 75A of the Pensions Act 1995 aim to ensure defined benefit occupational pension schemes are properly funded on wind-up, or when the sponsoring employer goes into liquidation. In a multi-employer arrangement, a liability also arises for any employer that stops employing active members while another employer still has at least one active member (an ‘employment cessation event’), even though neither the scheme nor the exiting employer is being wound up. For further detail on when section 75 debts arise and how they are assessed, see the following Practice Notes: How to deal with a section 75 debt—an introduction When is a section 75 debt triggered? Calculating a section 75 debt What is the tax treatment of a section 75 debt? When a section 75 debt is payable, the key tax question is whether the payer can...

The Finance Act 2014 ( FA 2014) FA 2014 brought in accelerated payment notices ( APNs) and partner payment notices ( PPNs) to tackle tax avoidance by discouraging participation in avoidance arrangements, notably by stripping out any cashflow advantage. The regime is intended to deter taxpayers from joining avoidance schemes by removing the cashflow benefit that would otherwise be enjoyed whilst a dispute is ongoing or under appeal before FTT. In direct tax disputes where no APN has been served, HMRC frequently consents to a taxpayer’s request to defer collection of the contested sum until the First-tier Tribunal ( Tax Chamber) ( FTT) has determined the issue. Once an APN or PPN is issued, postponement of the disputed tax is not permitted and any existing postponement falls away. As a result, APNs or PPNs oblige taxpayers to settle the amount under challenge before their appeal is...

ARCHIVED : This Practice Note has been archived and is not maintained This archived Practice Note, which is no longer updated, covers the Finance Act 2015 ( FA 2015), which received Royal Assent on 26 March 2015. It is retained for historic interest, tracing the passage of the legislation through Parliament and outlining each provision in the Act with relevant links. The Practice Note is divided into five parts: Progress of FA 2015 Published legislation with immediate effect— Budget 2015 Published legislation with immediate effect— Autumn Statement 2014 Published legislation taking effect later Awaiting draft legislation Several measures identified in Budget 2015 for FA 2015 were postponed until after the general election. The deferred clauses include: The new statutory exemption from income tax for trivial benefits in kind, implementing an Office of Tax...

Under the Human Rights Act 1998 ( HRA 1998), all public authorities in the UK are required to act consistently with the European Convention on Human Rights ( ECHR), namely the ‘ Convention rights’. For further reading, see Practice Note: Convention rights. If this obligation is breached, the HRA 1998 allows any victim to bring proceedings against the public authority at fault ( HRA 1998, s 7(1)(a)). Additionally, a victim may rely on their Convention rights in any legal proceedings ( HRA 1998, s 7(1)(b)). Background—the relationship between the ECHR and the HRA 1998 The ECHR (the ‘ Convention’, as set out in HRA 1998, Sch 1 Pt 1) is an international treaty concluded by the member states of the Council of Europe. Under Article 1, each contracting state must secure the Convention rights for everyone within its jurisdiction. The Convention also...

What are growth shares? Growth shares, sometimes called value shares or hurdle shares, are a distinct share class with limited rights. Those rights are structured so that staff only share in increases in the company’s worth arising after an acquisition. As a result, they broadly mirror the economics of an option where the exercise price is set at market value (or includes a premium). For a comparison of growth shares with share options, see Practice Note: Growth shares—practical examples and comparisons with options. Their restricted rights focus returns on value created after the acquisition, rather than on historic value at acquisition for the company specifically. Key elements of growth shares The employee acquires the growth shares up front—unlike a share option or a conditional share award, under which the individual receives shares at a later date only once specified conditions have been...

STOP PRESS/ FORTHCOMING CHANGES : The UK intends to bring the OECD’s Cryptoasset Reporting Framework ( CARF) into domestic law from 1 January 2026. Implementation will be through the Reporting Cryptoasset Service Providers ( Due Diligence and Reporting Requirements) Regulations 2025 ( SI 2025/744), which were laid before the House of Commons on 25 June 2025. On the same day, HMRC issued tax impact and information notes ( TIIN) for the measure. HMRC has also published guidance on reporting under the CARF. The government has likewise introduced legislation amending the domestic provisions 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 2015/878) and the amending instrument is the...

This Practice Note examines the following matters in the context of private equity-backed buyouts: the situations in which costs borne by the acquisition group in relation to the buyout are allowable as deductions for corporation tax purposes the extent to which any VAT charged on those costs can be reclaimed by the acquisition group It is assumed that all companies comprising the acquisition group are UK tax resident and that the buyout is implemented as a purchase of shares in the target company (target). For additional detail on how private equity-backed buyouts are usually structured and financed, and on other tax considerations arising for the acquisition group, see Practice Notes: Tax and management buyouts—what is a management buyout?, Tax and secondary buyouts—what are secondary buyouts? and Tax and buyouts—tax issues for the acquisition...

The Seed Enterprise Investment Scheme ( SEIS), akin to the Enterprise Investment Scheme ( EIS), exists to stimulate investment into smaller, higher‑risk trading businesses by offering a suite of tax incentives to individual investors acquiring newly issued shares in those companies. The SEIS framework is prescriptive and imposes a range of conditions that must be satisfied, covering: individual investors the issued shares, the funds raised and arrangements in general the issuing company This Practice Note concentrates on the criteria applicable to the individual investor. They are set out by reference to the income tax relief contained in Part 5A of the Income Tax Act 2007 ( ITA 2007). Capital gains tax ( CGT) relief—whether via the disposal exemption or re‑investment relief—applies only to shares that attract SEIS income tax relief, so these criteria equally govern entitlement to CGT relief. For the remaining...

This Practice Note offers an introduction to the HMRC tax-advantaged Share Incentive Plan ( SIP). It summarises: the categories of award available under a SIP the principal requirements that must be met to operate a SIP the documentation likely to be needed in relation to a SIP, and the tax treatment for both the employee and the employer Background to a SIP The SIP enables employees to obtain shares in their employer, or a parent company of the employer, in a tax-efficient manner. The legislative framework for the SIP is primarily set out in: Schedule 2 to the Income tax ( Earnings and Pensions) Act 2003 ( ITEPA 2003), which explains how a SIP may operate and the key conditions that must be met for it to qualify as a ‘ Schedule 2 SIP’ ITEPA 2003, Pt 7 Ch 6 (...

This Practice Note sets out: why companies adopt employee ownership models the principal types of share ownership models, and issues to weigh when implementing a share scheme For a more detailed analysis of why companies use share schemes, see Practice Note: Why do companies use share schemes? Why do companies have employee ownership? Employee ownership usually arises in the following situations: business succession or ownership succession — private owners, such as an entrepreneur or a family business, choose to sell all, or more often, part of their shareholdings to their workforce insolvency or closure threat — employee buyouts can be an effective route to recovery for businesses that might otherwise fail independence — companies may determine that a significant, even majority, employee stakeholding will signal and help protect the company’s independence privatisation — the privatisation of various companies has occasionally created opportunities for employee buyouts, and owner vision and...

Dividend A company possesses an implied authority to distribute its profits to its members, unless its articles of association stipulate otherwise. A dividend represents one form of distribution made by a company to its members; indeed, dividends are, in practice, the form of distribution most commonly made by companies. To make a lawful distribution, the company must comply with Part 23 of the Companies Act 2006 ( CA 2006) and with the common law rules on distributions, as those rules are modified by the statutory provisions just mentioned. For discussion of the law and practice applicable to company distributions, see Practice Note: Distributions. For an outline of the consequences of failing to comply with the law on distributions, see Practice Note: Unlawful distributions. In ordinary parlance, ‘dividend’ means a share of profits, whether at a fixed rate or otherwise, allocated to the holders of a...

ARCHIVED : This Practice Note has been archived and is not maintained. The Liechtenstein Disclosure Facility ( LDF) was a voluntary route for disclosure that covered all principal taxes, including, but not limited to, income tax, corporation tax, PAYE, capital gains tax, VAT and inheritance tax. Launched in September 2009, it was initially intended to run until 2015, then extended to 5 April 2016, before the end date was brought forward to 31 December 2015. The LDF was open to all UK taxpayers, including individuals, executors, trustees, partnerships and companies. While directed at those with UK tax liabilities connected to Liechtenstein, taxpayers without an existing link could bring themselves within scope by, for example, opening a bank account in the jurisdiction. It enabled disclosure of tax irregularities for the ten years prior to April 2009 and allowed settlement on favourable terms, alongside a...

ARCHIVED: This Practice Note is archived and no longer updated. It summarises the Finance Act 2014 ( FA 2014), which obtained Royal Assent on 17 July 2014. It is retained for historical reference, tracing the legislation’s passage through Parliament and setting out each measure in the Act, with appropriate links. It is kept solely for historic interest, charting the development of the legislation and directing readers to descriptions of every measure. The Practice Note is arranged in six sections: Progress of FA 2014 Finance Bill Committee stages Published legislation with immediate effect— Budget 2014 Published legislation with immediate effect— Autumn Statement 2013 Published legislation with subsequent effect, and Awaiting draft legislation The tables below are organised by subject area and presented chronologically, with the newest update shown first in each table. Each section contains a brief...

A PAYE settlement agreement ( PSA) is an optional arrangement letting an employer cover, via one yearly payment, the income tax and National Insurance contributions ( NICs) due by their staff on specified minor and irregular expenses and benefits. A PSA does not replace an employer’s duty to run PAYE on ordinary earnings and to correctly report expenses and benefits. What can be included in a PSA? HMRC will accept a PSA when amounts or benefits are provided to employees and those amounts or benefits are: minor irregular, or impracticable to tax through the payroll, expenses or benefits systems Minor There is no set monetary threshold defining what counts as minor......