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Tax Take

Blog

Taylor Pearson – input tax on fees incurred in implementing a tax scheme

Published on 15 January 2020. By Nicole Kostic, Senior Associate

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In Taylor Pearson (Construction) Limited v HMRC [2019] UKFTT 691 (TC), the First-tier Tribunal (FTT) has held that input tax on fees incurred in implementing a tax scheme, intended to remunerate directors in a tax efficient manner, was deductible.

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Higgins – for the purposes of PPR relief "period of ownership" starts on completion

Published on 08 January 2020. By Michelle Sloane, Senior Associate

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In Desmond Higgins v HMRC [2019] EWCA Civ 1869, the Court of Appeal has held that the date of acquisition of an off-plan property for the purposes of principal private residence relief (PPR) was the date of completion and not the date of exchange of contracts.

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Jafari – HMRC criticised for breach of its duty to assist the Tribunal

Published on 18 December 2019. By Constantine Christofi, Associate

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In Jafari v HMRC [2019] UKFTT 692 (TC), the First-tier Tribunal (FTT) criticised HMRC for failing in its duty to bring relevant authorities to its attention.

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Contentious tax quarterly review (Q4 2019)

Published on 16 December 2019. By Adam Craggs, Partner and Constantine Christofi, Associate

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In this quarterly review we consider: HMRC’s increasing propensity to seek to strike out the taxpayer’s case; recent developments in relation to IR35; the timing of tribunal decisions; and the potential implications of the Inverclyde decision.

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Knibbs – HMRC's challenge to carry-back loss relief claims was correct

Published on 11 December 2019. By Constantine Christofi, Associate

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In Knibbs and ors v HMRC and R (oao Astley and ors) v HMRC [2019] EWCA Civ 1719, the Court of Appeal has held that Schedule 1B, Taxes Management Act 1970 (TMA) can apply to a claim for carry-back loss relief.

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Publication

Tax update - December 2019

05 December 2019

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In this month’s update we report on (1) two recent decisions concerning insolvent companies and EBTs in the context of insolvency law; (2) proposed legislation on HMRC’s use of automated processes; and (3) the taxation of cryptoasset transactions using exchange tokens. We also comment on three recent cases relating to (1) legitimate expectation; (2) the payment of costs by HMRC due to its unreasonable behaviour; and (3) the meaning of ‘deliberate’ in the Taxes Acts.

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Locke – Court of Appeal quashes follower and accelerated payment notices

Published on 04 December 2019. By Adam Craggs, Partner

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In R (on the application of Locke) v HMRC [2019] EWCA Civ 1909, the Court of Appeal quashed follower and accelerated payment notices issued to a participant in a film finance partnership, because HMRC had been wrong in considering that a judicial ruling was relevant to the arrangements under consideration.

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Publication

VAT update - November 2019

28 November 2019

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In this month’s update we report on (1) the revocation of the Cross-border Trade (Public Notices) (EU Exit) Regulations; (2) the new VAT group provisions; and (3) the digitisation of the tribunal service. We also comment on three recent cases which consider (1) who the recipient of a supply is in circumstances where there is more than one potential recipient; (2) single purpose vouchers and the time of supply; and (3) inaccuracy penalties in the absence of any supply.

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Coal Staff Superannuation Scheme – Taxation of manufactured overseas dividends breached EU law

Published on 27 November 2019. By Rebekka Sandwell, Associate

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In HMRC v Coal Staff Superannuation Scheme Trustees Ltd [2019] EWCA Civ 1610, the Court of Appeal dismissed HMRC's appeal and held that the imposition of withholding tax on manufactured overseas dividends was contrary to EU law.

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Publication

Customs and excise quarterly update November 2019

26 November 2019

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In this update we report on (1) the new customs legislation if the UK leaves the EU without a deal; (2) steel safeguard quotas; and (3) the recent deadline extension for customs authorisations made indirectly. We also comment on three recent cases relating to (1) civil evasion penalties; (2) the meaning of “holding” goods; and (3) tariff classification.

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Publication

Corporate tax update November 2019

22 November 2019

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Welcome to the latest edition of our Corporate Tax Update, written by members of RPC’s tax team. This month’s update reports on the key developments from September and October 2019. No update would be complete in the current climate without a report on a recent IR35 decision (this month, we bring you two). This month’s update also includes summaries as to HMRC’s latest thinking on the regime for offshore receipts in respect of intangible property, as well as case summaries on the interpretation of the UK-Irish double tax treaty, cross-border loss relief and the effect of statements in HMRC’s published manuals.

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Aozora GMAC Investment Ltd – HMRC did not breach a taxpayer's legitimate expectation

Published on 20 November 2019. By Constantine Christofi, Associate

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In R (oao Aozora GMAC Investment Ltd) v HMRC [2019] EWCA Civ 1643, the Court of Appeal has dismissed the taxpayer's claim that a statement in HMRC’s International Manual created a legitimate expectation, because the taxpayer had not relied on it substantively and, even if it had done, there was insufficient "unfairness" in frustrating the taxpayer's expectation.

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First Choice – HMRC ordered to pay taxpayer's costs as a result of its unreasonable behaviour

Published on 13 November 2019. By Constantine Christofi, Associate

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In First Choice Recruitment Ltd v HMRC [2019] UKFTT 412 (TC), the First-tier Tribunal (FTT) held that the taxpayer was entitled to its costs because HMRC had acted unreasonably.

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Publication

Tax update - November 2019

07 November 2019

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In this month’s update we report on (1) the government’s response to the Treasury Sub-Committee’s conclusions and recommendations in “Disputing Tax”; (2) the outcome of the consultation into offshore receipts in respect of intangible property; and (3) HMRC’s briefing regarding reform of the off-payroll working rules. We also comment on three recent cases relating to (1) the meaning of “trading company” in the context of entrepreneurs’ relief; (2) whether HMRC can conduct informal enquiries; and (3) the disposal of a business with goodwill and the capital gains tax implications of that disposal.

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Blog

Cliff: Tax tribunal considers the meaning of ‘deliberate’

Published on 06 November 2019. By Constantine Christofi, Associate

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In Cliff v HMRC [2019] UKFTT 564, the First-tier Tribunal (FTT) has held that the taxpayer had 'deliberately' submitted an inaccurate return to HMRC.

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Publication

VAT update October 2019

31 October 2019

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In this month’s update we report on (1) how businesses who have paid too much VAT, as a result of an error in the TOMS, can correct it; (2) delays to the introduction of the domestic VAT reverse charge on construction services; and (3) the OTS’s update on its VAT review. We also comment on three recent cases relating to (1) whether a charity’s supply of educational services was for “remuneration”; (2) salary sacrifice arrangements and their effectiveness; and (3) whether an assessment was made to “best judgement”.

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Blog

Pertemps – Upper Tribunal provides guidance on salary sacrifice arrangements

Published on 30 October 2019. By Nicole Kostic, Senior Associate

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In HMRC v Pertemps Ltd [2019] UKUT 234 (TCC), the Upper Tribunal (UT) has provided helpful guidance on salary sacrifice arrangements and their effectiveness.

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Potter – Tribunal considers the meaning of "trading company" in the context of entrepreneurs' relief

Published on 23 October 2019. By Rebekka Sandwell, Associate

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In Jacqueline Potter and Neil Potter v HMRC [2019] UKFTT 0554 (TC), the First-tier Tribunal (FTT) has confirmed that the owners of a company were entitled to entrepreneurs relief (ER) as the activities of the company amounted to trading.

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Leeds Cricket Football & Athletic Co Ltd – business with attached goodwill disposed of

Published on 16 October 2019. By Constantine Christofi, Associate

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In The Leeds Cricket Football & Athletic Company Ltd v HMRC [2019] UKFTT 0568 (TC), the First-tier Tribunal (FTT) has held that the freehold in a cricket ground involved the disposal of a business with attached goodwill and was not simply a disposal of land with attached income streams.

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Blog

JJ Management: No need to stand on formalities

Published on 09 October 2019. By Adam Craggs, Partner and Constantine Christofi, Associate

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It would appear from the decision of the High Court in R (oao JJ Management LLP and Ors) v HMRC [2019] EWHC 2006 (Admin), that HMRC can conduct informal enquiries outside of section 9A, Taxes Management 1970 (TMA).

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Publication

Tax update October 2019

Published on 03 October 2019. By Adam Craggs, Partner and Constantine Christofi, Associate

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In this month’s update we report on (1) the independent review of the disguised remuneration loan charge; (2) HMRC’s guidance on preparing for the off-payroll working changes which come into effect from April 2020; and (3) HMRC’s updated guidance on the tax registration of non-resident companies. We also comment on three recent cases relating to (1) an application for final and partial closure notices; (2) the validity of an enquiry; and (3) pre-entry loss rules.

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Rialas – Transfer of assets abroad provisions did not apply

Published on 02 October 2019. By Constantine Christofi, Associate

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In Rialas v HMRC [2019] UKFTT 520, the First-tier Tribunal (FTT) has found that the transfer of assets abroad (TOAA) provisions, originally contained in section 739 et seq, Income and Corporation Taxes Act 1988 (ICTA) did not apply.

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Publication

Corporate tax update September 2019

Published on 30 September 2019. By Ben Roberts, Senior Associate and Adam Craggs, Partner and Robert Waterson, Partner

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This month’s update reports on the key developments from August 2019. Although this was a relatively quiet month in the corporate tax world, this update includes summaries of an important Upper Tribunal decision on the correct tax treatment of “trail commissions” and a First-tier Tribunal decision on the recovery of pre-incorporation input VAT.

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Draft Finance Bill 2019/20: HMRC’s new insolvency powers

Published on 27 September 2019. By Robert Waterson, Partner and Constantine Christofi, Associate

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Piercing the corporate veil? Robert Waterson and Constantine Christofi review the draft provisions that will empower HMRC to issue joint liability notices. (This article was originally posted on Tax Journal)

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VAT update September 2019

Published on 26 September 2019. By Adam Craggs, Partner and Nicole Kostic, Senior Associate

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In this month’s update we report on (1) changes to the reduced rate for energy-saving materials; (2) the VAT rule changes for higher education; and (3) new regulations amending the rules on when VAT adjustments may be made following a change to the price of goods and services. We also comment on three recent cases relating to (1) the refusal of a claim for the repayment of under-recovered input VAT; (2) the repayment of input VAT charged on the acquisition of single farm payment entitlement units; and (3) a notice of security issued with no explanation for the demand.

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Quentin Skinner – shares sold by trust eligible for entrepreneurs' relief

Published on 25 September 2019. By Michelle Sloane, Senior Associate

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In The Quentin Skinner 2008 Settlement L and others v HMRC [2019] UKFTT 516 (TC), the First-tier Tribunal (FTT) has held that for a trust to qualify for entrepreneurs' relief (ER) on a disposal of shares, it was not necessary for the trust's beneficiary to have had an interest in possession in the shares for the period prescribed in section 169J(4), Taxation of Chargeable Gains Act 1992 (TCGA).

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Contentious tax: quarterly review (Q3 2019)

Published on 20 September 2019. By Adam Craggs, Partner and Michelle Sloane, Senior Associate

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In this quarterly review, Adam Craggs and Michelle Sloane consider HMRC’s increasing propensity to seek the production of documents from accountants and other professional advisers, HMRC’s new policy of challenging taxpayers’ loan relationships, and the increase in the number of domicile enquiries launched by HMRC.

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Tinkler - Notice of enquiry invalid

Published on 19 September 2019. By Constantine Christofi, Associate

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In Tinkler v HMRC [2019] EWCA Civ 1392, the Court of Appeal has allowed the taxpayer's appeal and held that HMRC's notice of enquiry under section 9A, Taxes Management Act 1970 (TMA), was invalid.

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Smart & Son - Supreme Court confirms VAT incurred on funds raised for business purpose was recoverable

Published on 06 September 2019. By Nicole Kostic, Senior Associate

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In HMRC v Frank A Smart & Son [2019] UKSC 39, the Supreme Court has held that a farming company was entitled to repayment of input VAT charged on its acquisition of single farm payment entitlement units which were related to its overall economic activities and future taxable supplies.

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Publication

Tax update - September 2019

05 September 2019

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In this month’s update we report on (1) HMRC’s consultation on draft regulations implementing the requirement to disclose certain cross-border arrangements; (2) the Financial Secretary to the Treasury’s statement to Parliament on HMRC powers; and (3) the government’s response to the Joint Committee’s recommendations on the Draft Registration of Overseas Entities Bill.

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Levy – Tribunal rejects application for final and partial closure notices

Published on 30 August 2019. By Constantine Christofi, Associate

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In The Executors of Mrs R W Levy v HMRC [2019] UKFTT 418 (TC), the First-tier Tribunal (FTT), has held that HMRC was not in a position to issue either a final or partial closure notice.

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Corporate tax update August 2019

27 August 2019

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Welcome to the latest edition of our Corporate Tax Update, written by members of RPC’s tax team. This month’s update reports on the key developments from July 2019 and includes a summary of the key business tax measures coming out of the publication of the draft Finance Bill 2020 legislation. There is also commentary on the draft regulations and consultation document published by HMRC on the UK’s implementation of DAC6 (mandatory disclosure of cross-border tax planning arrangements).

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Customs and excise quarterly update: August 2019

21 August 2019

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In this update we report on (1) revised guidance on the Customs Special Procedures for the Union Customs Code; (2) the consultation HMRC has opened into proposed changes to the rules for red diesel used in private pleasure crafts; and (3) the government’s programme to replace EU international agreements with bilateral agreements ready for the UK’s exit from the EU. We also comment on three recent cases relating to (1) whether HMRC has the power to permit temporary trading pending the determination of an appeal to the First-tier Tribunal; (2) excise wrongdoing penalties raised out of time; and (3) an appeal against an assessment for unpaid excise duty.

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ANO - pre-ordained transactions avoided CGT losses being caught by pre-entry loss rules

Published on 05 August 2019. By Adam Craggs, Partner

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In ANO (No1) Limited v HMRC [2019] UKFTT 406 (TC), the First-tier Tribunal (FTT) has held that a pre-ordained series of transactions implemented to avoid the application of Schedule 7A, Taxation of Chargeable Gains Act 1992 (TCGA) to pre-entry losses were effective.

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Inverclyde – Enquiry into LLP returns invalid as opened under incorrect statutory provisions

01 August 2019

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In Inverclyde and another v HMRC [2019] UKFTT 0408 (TC), the First-tier Tribunal (FTT) has held that enquiries opened, and closure notices issued, to limited liability partnerships (LLPs) were invalid as HMRC should have enquired into the LLPs returns under paragraph 24, Schedule 18, Finance Act 1998 (FA 1998) and not section 12AC, Taxes Management Act 1970 (TMA).

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Tax update - August 2019

01 August 2019

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In this month’s update we report on (1) HMRC’s summary of responses to its ‘protecting your taxes in insolvency’ consultation; (2) HMRC’s policy paper on the misuse of company insolvencies; and (3) HMRC’s new guidance on loan relationships and derivatives regime anti-avoidance rules.

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Corrado – Tribunal cancels follower notice penalties 

Published on 31 July 2019. By Adam Craggs, Partner

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In Giulio Corrado v HMRC [2019] UKFTT 275 (TC), the First-tier Tribunal (FTT) has set aside a follower notice penalty as the taxpayer's failure to take corrective action in response to a follower notice was reasonable in all the circumstances.

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Warshaw – preference shares equal to ordinary share capital and taxpayer entitled to entrepreneurs' relief

Published on 29 July 2019. By Michelle Sloane, Senior Associate

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In Steven Warshaw v HMRC [2019] UKFTT 268 (TCC), the First-tier Tribunal (FTT) has confirmed that as the relevant preference shares did not attract a fixed dividend, they could amount to ordinary share capital for the purpose of entrepreneur's relief (ER).

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Development Securities – Jersey-incorporated SPVs held not to be UK tax resident

Published on 26 July 2019. By Ben Roberts, Senior Associate

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In Development Securities plc and others v HMRC [2019] UKUT 0169 (TCC), the Upper Tribunal (UT) has held that a number of Jersey-incorporated companies were in fact resident for tax purposes in Jersey. This decision overturned the decision of the First-tier Tribunal (FTT), which had held that the companies were UK tax resident as a result of the central management and control (CMC) of the companies being exercised in the UK (through the companies’ parent). The UT took the view that the FTT had incorrectly concluded that the Jersey company directors had abdicated their decision-making responsibility.

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VAT update July 2019

23 July 2019

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In this month’s update we report on (1) the revocation of the VAT (Finance) (EU Exit) Order; (2) a recent HMRC Brief that clarifies HMRC’s policy on the scope of VAT for transport services; and (3) new regulations which amend the rules on when VAT adjustments may be made following a change to the price of goods and services.

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Corporate tax update July 2019

16 July 2019

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Welcome to the latest edition of our Corporate Tax Update, written by members of RPC’s tax team. This month’s report includes summaries of the recent decision of the Upper Tribunal on corporate tax residence in Development Securities plc, two ECJ decisions on cross-border loss relief and yet another decision on the application of the ‘IR35’ rules.

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Marks & Spencer – 'free' wine supplied as part of a promotional offer was subject to VAT

Published on 16 July 2019. By Nicole Kostic, Senior Associate

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In Marks and Spencer plc v HMRC [2019] UKUT 0182 (TCC), the Upper Tribunal (UT) has upheld the First-tier Tribunal's (FTT) decision that wine supplied 'free of charge' as part of a promotion was subject to VAT.

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OWD – HMRC unable to permit temporary trading pending appeal

Published on 12 July 2019. By Michelle Sloane, Senior Associate

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In OWD Ltd trading as Birmingham Cash and Carry (in Liquidation) and Anor v HMRC [2019] UKSC 30, the Supreme Court has held that HMRC does not have power under section 88C, Alcohol Duties Liquor Act 1979 (ALDA) or section 9, Commissioners for Revenue and Customs Act 2005 (CRCA), to permit temporary trading pending the determination of an appeal to the First-tier Tribunal (FTT) against HMRC's refusal to grant approval under the Alcohol Wholesalers Registration Scheme (AWRS).

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Haworth – Court of Appeal confirms HMRC misdirected itself and quashes payment notices

Published on 03 July 2019. By Adam Craggs, Partner and Constantine Christofi, Associate

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The recent unanimous judgment of the Court of Appeal in R (on the application of Haworth) v HMRC [2019] EWCA Civ 747, is the first successful judicial review challenge against follower and accelerated payment notices. The decision throws into question the way in which the relevant statutory provisions, contained in Finance Act 2014 (FA 2014), relating to follower and accelerated payment notices have been interpreted and operated by HMRC and as a consequence, many other notices may also have been issued by HMRC unlawfully.

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Tax update - July 2019

03 July 2019

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In this month’s update we report on HMRC’s updated guidance on the meaning of “ordinary share capital”, the Law Society’s response to HMRC’s off-payroll working rules consultation and changes to the principal private residence ancillary reliefs.

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Ritchie - FTT guilty of procedural unfairness

Published on 26 June 2019. By Constantine Christofi, Associate

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In Ritchie v HMRC [2019] UKUT 007 (TCC), the Upper Tribunal (UT) has held that the First-tier Tribunal (FTT) had erred in finding that a loss of tax had been brought about by carelessness on the part of the taxpayers' professional advisers because, amongst other things, the carelessness of the advisers had not been adequately pleaded by HMRC and had not been put to any of the witnesses in cross-examination.

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Publication

VAT update June 2019

21 June 2019

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In this month’s update we report on (1) amendments to the reduced VAT rate for energy-saving materials; (2) HMRC’s guidance on the VAT reverse charge on construction services; and (3) HMRC’s updated VAT Notice 700/1 – who should register for VAT.

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Derry - HMRC challenge to share loss relief claim flawed

Published on 18 June 2019. By Constantine Christofi, Associate

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In R (on the application of Derry) v HMRC [2019] UKSC 19, the Supreme Court has dismissed HMRC's appeal and confirmed that the taxpayer was entitled to claim share loss relief in the year in which the loss was incurred, rather than the following year.

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National Car Parks - Are overpayments consideration for VAT purposes?

Published on 14 June 2019. By Nicole Kostic, Senior Associate

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In National Car Parks Ltd v HMRC [2019] EWCA Civ 854, the Court of Appeal has confirmed that excess amounts paid by customers at pay and display car parks were consideration for VAT purposes.

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Publication

Tax update - June 2019

05 June 2019

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In this month’s update we report on HMRC’s guidance in relation to off-payroll working in the public sector and the intermediaries legislation (so-called IR35), the extension of late payment and repayment interest to penalties levied under the DOTAS, promoters, and enablers of tax avoidance, regimes; and HMRC’s guidance on the economic interest requirement for shareholders who wish to claim entrepreneurs’ relief.

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