Corporate Tax Update - July 2021
Welcome to the latest edition of our Corporate Tax Update, written by members of RPC’s tax team.
This month’s update reports on some of the key developments from May and June 2021. Included in this update are news of the historic G7 agreement as to plans for global tax reform, summaries of two cases on the required formalities for bringing contractual claims for breach of warranty and pursuant to a tax covenant, and news of another win for HMRC in an ‘IR35’ case.
As ever we hope you, your family and friends are all staying safe and are enjoying the summer.
On 29 June 2021, the Upper Tribunal held that neither (1) a “success fee” payable to an employee’s legal team, nor (2) an insurance premium payable on a policy against the risk of having to pay the employer’s legal costs, were taxable as earnings. Read more
On 29 June 2021, HMRC announced a further (continued) extension to the deadline (from 30 days to 90 days) for notifying a decision to opt to tax land for VAT purposes. This now applies to decisions made between 15 February 2020 and 31 July 2021. Read more
On 18 June 2021, HMRC announced that its physical stamping presses would be decommissioned. As a result, the only method of stamping is now the electronic procedure introduced (“temporarily”, at first) in March 2020 at the beginning of the Covid-19 pandemic. Read more
On 8 June 2021, the Upper Tribunal (UT) held that the ‘IR35’ rules applied to services provided via a personal services company (PSC) to the Nationwide Building Society. Read more
On 5 June 2021, the ‘G7’ nations agreed a deal on global tax reform. However challenges still lie ahead before reform of the international tax rules can be achieved. Read more
AG opines as to VAT treatment of parking fines
On 3 June 2021, the Advocate General (AG) opined that a parking fine is consideration for VAT purposes (rather than a VAT-exempt amount of compensation). In the AG’s view, there was a direct link between the parking fine and a service received by the motorist (being a space to park). Accordingly, VAT should be charged on the parking fine. The AG expressed the view that ‘compensatory’ payments should only be exempt from VAT where the payment is compensation for a supply having not occurred. Read more
ECJ holds that leased land was not a fixed establishment for VAT purposes
On 3 June 2021, the ECJ held that the mere leasing of land (in Austria) did not amount to a “fixed establishment” of the landlord there for VAT purposes. The landlord had no staff in Austria, but instead relied on an independent agent to manage the property. Read more
VAT and land – call for evidence published by HMRC
On 12 May 2021, HMRC published a call for evidence on the VAT land exemption. The consultation closes for comments on 3 August 2021 and seeks views on options for simplifying the VAT rules for land and property. Read more
TP Icap Ltd v Nex Group Ltd and Dodika Ltd v United Luck Group Holdings: two interesting decisions on SPA warranty/indemnity claim formalities TP Icap Ltd v Nex Group Ltd
On 27 May 2021, the High Court struck out large parts of the claimant’s claim as (in the High Court’s view) the purported SPA notices of claim were defective. The decision highlights the difficulties faced by Purchasers of companies in making so-called ‘contingent’ claims under warranties and indemnities, in particular when a Purchaser becomes aware of third party investigations close to the expiry of any contractual time limits for bringing claims. Read more
Dodika Ltd v United Luck Group Holdings
On 7 May 2021, the Court of Appeal held that a purchaser’s notice of claim under an SPA tax covenant was not invalid on the grounds that it failed to state “in reasonable detail the matter which gives rise” to the tax covenant claim. Read more
OTS publishes 2nd report on CGT rules
On 20 May 2021, the Office of Tax Simplification (OTS) published its report Capital Gains Tax Review – Simplifying practical, technical and administrative issues. This is the 2nd report by the OTS on CGT. The 1st report, published by the OTS on 11 November 2020, considered CGT policy design. Read more