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Introduction to statutory interpretation The aim of statutory interpretation is to determine the legal meaning of a statute, that is, the sense that expresses the legislator’s intention. The clearest guide to that intention is the statutory wording itself, read in its context and with its overall purpose in mind, and its broader legislative setting. Courts should seek to fulfil the purpose of legislation by construing its language, so far as they can, in the manner that most effectively serves that purpose. Put differently, the courts’ default method is purposive, and every enactment is to be construed with that end in view. There is a starting presumption that the grammatical and ordinary sense of an enactment reflects the meaning intended by the legislator. Where an enactment reasonably bears only a single meaning, and no other interpretative tools or
This Practice Note addresses identifying a fiduciary, fiduciary duties and obligations, the no conflict rule, the no profit rule, a fiduciary's duty of confidence, and the remedies available for breach of fiduciary duty. Who is a fiduciary? There is no definitive catalogue of relationships that give rise to fiduciary obligations at common law in every situation universally. Certain relationships are inherently fiduciary, eg trustee and beneficiary, solicitor and client, principal and agent, business partner and co-partners, together with mortgagor and mortgagee. The obligations of some fiduciaries have been set out in statute; for instance, trustees owe a statutory duty of skill and care under section 1 of the Trustee Act 2000 (TrA 2000), and directors' relationships with their companies are addressed in the Companies Act 2006 too. For guidance on directors' fiduciary duties, see Practice Note: of directors for further detailed
Definition of ADR Alternative dispute resolution (ADR) is defined in the CPR Glossary as a collective label for methods of settling disputes other than through the usual trial process. Some courts adopt the term ‘negotiated dispute resolution’ (NDR) to describe resolution by alternative means; for ease, this Practice Note uses ADR. For guidance on how ADR is addressed in the various court guides, see Practice Note: ADR and NDR in the court guides. In essence, ADR is a means of resolving a dispute outside the court system. It typically involves a neutral third party who either helps the parties reach a negotiated outcome, or issues a determination of the dispute that is legally binding. A binding result can follow where the agreement to refer the dispute to ADR so provides. There are multiple forms of ADR processes. For an outline of the different types and their
In brief The British constitution is uncodified, meaning it does not spring from a single constitutional document or code. It draws on a wide range of written and unwritten sources. Alongside the principal written sources of law in England and Wales—legislation (which has also introduced international and human rights principles into our constitution) and the common law—the constitution also rests on two further unwritten bases within this system: the prerogative, and non-legal constitutional conventions. In addition, on one view the basic or prevailing principle of our constitution, Parliamentary sovereignty, is ultimately grounded in political fact rather than in law. Legislation Legislation is the foremost source of constitutional law. Acts of Parliament may set out detailed constitutional rules, or even pass authority to create them to ministers or to others. Under the doctrine of Parliamentary sovereignty, legislation is traditionally regarded as taking precedence over any other form or kind of
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Background The coronavirus ( COVID-19) crisis has severely affected businesses worldwide, leaving many at genuine risk of insolvency. In response, some jurisdictions have temporarily amended their insolvency regimes to support companies (and their directors) and individuals, given ongoing uncertainty about how long the crisis will last and what its enduring consequences will be. This Practice Note examines the UK position. For information on reforms in other countries, see: Coronavirus ( COVID-19) Tracker of insolvency reforms globally [ Archived]. Previous proposals for reform On 26 August 2018, the government issued its response to consultations on Insolvency and Corporate Governance, setting out several intended changes to UK insolvency law. The proposals included: a moratorium available to all companies, giving time to develop restructuring proposals without creditor pressure a new ‘restructuring plan’, a formal process enabling companies to cram down dissenting creditors a ban on...
This Practice Note outlines the UK regime governing cosmetics. It defines what counts as a cosmetic product and details the conditions for placing such products on the market in Great Britain ( GB) while safeguarding their safety. It also covers limits on particular ingredients, the prohibition on animal testing, the criteria for making cosmetic product claims, which bodies enforce the rules in the UK, and the applicable oversight mechanisms. The Practice Note further addresses the situation in Northern Ireland ( NI), which follows EU cosmetics requirements, insofar as that position diverges from the approach in the EU, where relevant. UK regulatory framework for cosmetics The UK framework largely stems from Regulation ( EC) 1223/2009 on cosmetic products, commonly referred to as the EU Cosmetic Products Regulation ( EU CPR). For material on the EU cosmetics regime, see Practice Note: Regulation of cosmetic products in the EU. The EU CPR...
Dividends paid to shareholders on their shares are the form of distribution most frequently encountered—essentially a transfer of accumulated profits to the company’s owners. For corporation tax, however, distribution has a much broader scope. The Corporation Tax Act 2010 ( CTA 2010) prescribes the particular situations in which a company is treated as having made a distribution. In certain instances, amounts described as interest can be recharacterised as distributions for tax purposes. The two principal scenarios are: distributions relating to non-commercial securities (category E)—see Practice Note: Types of distribution—interest recharacterised as a distribution: non-commercial securities; and distributions concerning special securities (category F), addressed in this Practice Note Exclusion from distribution treatment Some cases are excluded from being treated as distributions, as outlined below. Interest and distributions are taxed differently for a corporate recipient: interest receipts are generally brought within the loan...
SME R& D relief—tax credit (pre-1 April 2024) This Practice Note addresses the principal research and development ( R& D) relief available to small and medium-sized enterprises ( SMEs) for accounting periods that start before 1 April 2024, subject to any transitional rules, as considered in this guidance. For more detail, refer to Practice Note: SME R& D relief—additional deduction (pre-1 April 2024) and associated references. For further guidance on the R& D expenditure credit applicable to accounting periods commencing before 1 April 2024, see Practice Note: R& D expenditure credit (pre-1 April 2024). Collectively, this Practice Note calls these two arrangements the pre-1 April 2024 schemes within this note. For details on reliefs for R& D that broadly apply to accounting periods starting on or after 1 April 2024, see Practice Notes: The merged R& D expenditure credit (post-1 April 2024) and...
The loan relationships regime sets out the rules governing the taxation and relief of a company’s profits and losses arising from its ‘loan relationships’. Those rules are contained in Part 5 of the Corporation Tax Act 2009 ( CTA 2009), with further provisions included in Part 6. This Practice Note examines the categories of transactions and other arrangements that come within the scope of the loan relationships regime. For the computational rules that determine how profits and losses on loan relationships are calculated and brought into account for corporation tax purposes, see Practice Note: Loan relationships—the main tax rules. Who is taxed under the loan relationships regime? The loan relationships rules apply to companies within the charge to corporation tax......
Stop Press : Chapter 2, Part 2 of Schedule 6 to the Finance Act 2026 introduces a series of amendments to the rules governing transfers of, or the granting of licences in relation to, intangible fixed assets ( IFAs) between related parties. These statutory updates apply in respect of transfers and grants that take place on or after 1 January 2026; however, they will not apply to a transfer or grant on or after that date where it is carried out to meet an obligation, under a contract, that had become unconditional before that date. The amendments also provide clearer guidance on how the transfer pricing rules (in Part 4 of the Taxation ( International and Other Provisions) Act 2010) interact with, and sit alongside, the market value provisions in sections 845, 846 and 849AB of the Corporation Tax Act 2009......
R& D expenditure credit (pre-1 April 2024) This Practice Note outlines the R& D expenditure credit ( RDEC) regime that applies to accounting periods starting before 1 April 2024, subject to transitional provisions. For details of the primary research and development relief available to small or medium-sized enterprises ( SMEs) for periods beginning before 1 April 2024, see Practice Notes: SME R& D relief—additional deduction (pre-1 April 2024) and SME R& D relief—tax credit (pre-1 April 2024). Collectively, in this Practice Note, these two arrangements effective before 1 April 2024 are called the pre-1 April 2024 schemes. For guidance on the reliefs that generally apply to accounting periods commencing on or after 1 April 2024, see Practice Notes: The merged R& D expenditure credit (post-1 April 2024) and Enhanced relief for loss-making R& D-intensive SMEs (post-1 April 2024). What is the pre-1 April 2024 R& D...
ARCHIVED : This Practice Note has been archived and is not maintained. A specific regime formerly provided corporation tax relief for qualifying expenditure: incurred by large companies before 1 April 2017 on research and development ( R& D) relating to certain vaccines and medicines The regime was repealed for large companies by Finance Act 2016 and does not apply to expenditure incurred on or after 1 April 2017. ( For small and medium-sized enterprises ( SMEs), it was withdrawn for expenditure incurred on or after 1 April 2012). This Practice Note explains the regime as it applied to large companies for expenditure incurred before 1 April 2017. Note that vaccine research relief was unaffected by the replacement of the large companies’ R& D relief with the R& D expenditure credit ( RDEC) from 1 April 2016 (or by an earlier...
The merged R& D expenditure credit (post-1 April 2024) FORTHCOMING CHANGE: R& D tax reliefs advance clearances and clarification of corporation tax treatment of payments for surrender of credit within groups: Following an initial announcement at Autumn Budget 2024 within the government’s Corporate Tax Roadmap, and a consultation released at Spring Statement 2025, the government confirmed at Budget 2025 that it will pilot a targeted R& D advance assurance service from spring 2026. The pilot will focus on specified elements of R& D claims made by small and medium-sized enterprises and will run in parallel with the existing R& D advance assurance. At Budget 2025, the government also announced that Finance Bill 2026 will introduce legislation to make clear that payments made on or after 26 November 2025 between group companies, in consideration for one company surrendering RDEC to another, are to be ignored for...
A core tenet of the loan relationships regime is that a company’s borrowing, lending and other corporate debt are taxed by reference to the profits and losses recorded in its accounts. Put differently, the way a loan relationship is recognised and measured under accounting standards will, in most cases, dictate the debits and credits taken into account for corporation tax under the loan relationships code. Although the rules depart from this approach in a number of specific situations, the strong alignment of tax with the financial statements means it is essential to understand the accounting treatment of corporate finance arrangements in order to operate the computational provisions of the loan relationships rules. Consequently, applying tax computations correctly requires familiarity with how such instruments are accounted for......
Corporation tax applies to UK-resident companies (and some other entities), taxing their income and gains for each accounting period, which are apportioned across financial years to set the applicable rate payable. It equally covers non- UK resident companies that conduct UK trade via a permanent establishment ( PE), as well as in a few other defined situations arising under the legislation. Legislative basis for corporation tax The bulk of the corporation tax framework is set out in: Corporation Tax Act 2009 Corporation Tax Act 2010 Taxation ( International and Other Provisions) Act 2010 Parliament grants the charge to corporation tax annually. Each Finance Act includes a provision confirming that corporation tax is levied for that financial year. This annual mechanism underpins the relevant financial year. For further information on the yearly character of corporation tax and its effects, see Practice Note: The Budget and...
Large company R& D relief (pre–1 April 2016) [ Archived] ARCHIVED: This Practice Note has been archived and is no longer maintained. It explains the large company R& D relief, which ceased with effect from 1 April 2016 and was superseded by the R& D expenditure credit ( RDEC). The former relief remained in point until 1 April 2016 for expenditure incurred up to that date. Up to and including 31 March 2016, large companies—and SMEs claiming the large company equivalent where their spend did not meet the SME relief criteria—could make an irrevocable election to take the RDEC in place of the large company R& D relief for qualifying costs incurred on or after 1 April 2013. The RDEC is now the only R& D relief open to those businesses; for details, see Practice Note: R& D expenditure credit (pre-1 April 2024). This...
What is land remediation relief? ( LRR) LRR provides corporation tax relief on expenditure incurred in remediating contaminated land or in bringing derelict sites back into use. In 2009, the regime was broadened to address market failure by returning long-term derelict land to use, bringing such sites back into use. An incentive applies where land, whose development has been affected by various kinds of continuing dereliction, is brought back into productive use. The extension was intended to correct market failure by encouraging activity on sites blighted by ongoing dereliction. The relief was at risk of being discontinued after 2012; however, the 2012 Budget confirmed it would continue. The October 2024 HM Treasury Corporate Tax Roadmap, published alongside Autumn Budget 2024, notes the new Labour government’s commitment to a brownfield-first approach, prioritising the development of previously used land wherever possible. Given the time since the last review of LRR, and...
Under Part 8 of the Corporation Tax Act 2009 ( CTA 2009), the starting point for the corporate intangible assets regime is that a company measures gains and losses on its intangible fixed assets ( IFAs) as corporation tax credits and debits, for corporation tax purposes, by reference to the way those IFAs are accounted for. Put simply, accounts drawn up in line with generally accepted accounting practice ( GAAP) provide the basis from which the figures and categories that become taxable or relievable in relation to a company’s IFAs are determined. This approach is commonly known as ‘tax following the accounts’. That said, the regime contains a number of carve-outs: on certain matters the rules override the accounting outcome and mandate that IFA credits and debits are worked out using an alternative method instead, calculated on a different basis overall. For more on the tax...
Under the loan relationships regime, a fundamental rule is that a company must bring profits and losses on its loan relationships into account for corporation tax in line with how those relationships are recognised in its accounts, provided that treatment complies with GAAP. For more detail on the general framework governing how profits and losses on loan relationships are calculated and brought into account for corporation tax, see Practice Note: Loan relationships—the main tax rules. There are, however, circumstances in which the loan relationships legislation requires the tax position to move away from the amounts shown in the accounts. This can arise where a debt within the loan relationships rules: becomes impaired, or is released (in whole or in part) It should be made clear at the outset that these provisions—which can trigger a departure from the accounts in such cases—only apply where a...
Hybrid rules This Practice Note sets out the UK provisions (referred to in this Practice Note as the hybrid rules) that, for corporation tax purposes, neutralise hybrid and other mismatch outcomes. Such mismatches exploit differences in the tax treatment of an entity or instrument under the laws of two or more jurisdictions to produce double non-taxation, including extended deferral. Although the hybrid rules are said to be grounded in the OECD/ G20 Final Report on BEPS Action 2: Neutralising the Effects of Hybrid Mismatch Arrangements (5 October 2015) and the OECD’s Report on BEPS Action 2: Neutralising the Effects of Branch Mismatch Arrangements (27 July 2017) (together, the Action 2 recommendations), HMRC guidance at INTM550020 also confirms that the UK hybrids legislation is intentionally broader than the OECD recommendations in certain areas, so the outcomes may diverge from those under the OECD...
ARCHIVED This Practice Note has been archived and is no longer maintained. It deals solely with the anti-diversion rule applying to accounting periods beginning before 1 January 2013. For the rule that applies to periods after that date, see: Foreign branch exemption—anti-diversion after 1 January 2013 Purpose of the anti-diversion rule The foreign branch exemption is constrained by an anti-avoidance measure intended to prevent a UK resident company from diverting profits away from the UK, ie to stop a UK company arranging for profits to arise in a foreign PE (and thus be exempt) rather than in the UK (where they would be taxable). This is known as the anti-diversion rule. The foreign branch exemption was introduced, alongside interim enhancements to the CFC regime, by Schedule 13 to the Finance Act 2011 ( FA 2011)......
ARCHIVED This archived Practice Note outlines the criteria that must be satisfied for a distribution from a controlled company, received by a UK corporation tax payer before 1 January 2013, to qualify for exemption from UK corporation tax. For details on distributions from controlled companies received on or after 1 January 2013, see Practice Note: Distribution exemption—distributions from controlled companies on or after 1 January 2013. A non-small company will be chargeable to corporation tax on a distribution it receives unless, amongst other specified requirements, the distribution falls within an exempt class......
As set out in Practice Note: Scope of distributions for tax purposes, distributions are grouped into four categories: dividends—covering paragraph A and considered further in this note transfers of assets or liabilities—covering paragraphs B and G and examined further in Practice Note: Tax-types of distribution—transfers of assets and liabilities interest recharacterised as a distribution—covering paragraphs E and F and discussed in greater detail in Practice Notes: Types of distribution—interest recharacterised as a distribution: non-commercial securities and Types of distribution—interest recharacterised as a distribution: special securities bonus issues of shares or securities—covering paragraphs C, D and H and explored in greater detail in Practice Note: Types of distribution—bonus issues Paragraph A—dividends The first category of distribution is any dividend made by the company, including a capital dividend. To assess whether a specific payment or transaction falls within this paragraph, one must...
Scope of distributions for tax purposes For tax purposes, distributions fall into four principal classes: dividends—covering paragraph A and explored in Practice Note: Tax—types of distribution—dividends transfers of assets or liabilities—covering paragraphs B and G and discussed further in this note interest treated as a distribution—covering paragraphs E and F and considered in Practice Note: Types of distribution—interest recharacterised as a distribution: non-commercial securities, and Types of distribution—interest recharacterised as a distribution: special securities bonus issues of shares or securities—covering paragraphs C, D and H and examined in further detail in Practice Note: Types of distribution—bonus issues Where a distribution could be within both paragraph B and paragraph G, it is regarded as within paragraph B alone......
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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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