Tax Bites - August 2020
Welcome to the latest edition of RPC's Tax Bites - providing monthly bite-sized updates from the tax world.
As always, if there are any areas you would like more information on, or if you have any questions or feedback, please let us know or get in touch with your usual RPC contact.
News
Anticipated losses may be used to reclaim corporation tax in "exceptional circumstances"
HMRC has updated paragraphs CTM92090 and CTM92650 of its company taxation manual to confirm that companies may, in "exceptional circumstances", reclaim corporation tax where the claim depends on events in a subsequent accounting period that has not ended at the time of the claim. Taxpayers will welcome this announcement, given the magnitude of losses apparently being incurred in some industries during the COVID-19 pandemic. Read more
HMRC guidance on disclosure of cross-border tax planning arrangements under DAC 6
HMRC has updated its International Exchange of Information Manual to include guidance on the disclosure of cross-border tax planning arrangements under EU Directive 2018/822 (DAC 6). Read more
Call for evidence on income tax avoidance schemes
Following the publication of next year's Finance Bill, HMRC has called for evidence on several issues including:
- what are the drivers of continuing use of disguised remuneration tax avoidance;
- whether there are any variations of disguised remuneration schemes not covered; and
- where can the Government take further action to tackle disguised remuneration tax avoidance beyond its planned approach.
This area remains a sensitive subject for HMRC, particularly in light of Sir Amyas Morse's 2019 review into the Loan Charge and the Government's eventual acceptance of most of its recommendations, which led to substantial revisions being made to the latest Finance Bill. Read more
Case reports
Drawing from directors' loan accounts not taxable as distributions
In Pickles v HMRC [2020] UKFTT 00195 (TC), the First-tier Tribunal (FTT), in a split decision, held that excessive consideration for goodwill left outstanding on directors' loan accounts was not taxable under section 1020, Corporation Tax Act 2010, as distributions. Read more
Belief in procedural invalidity of APN can constitute reasonable excuse
In Sheiling Properties Ltd v HMRC [2020] UKUT 175 (TCC), the Upper Tribunal (UT), in dismissing an appeal against penalties for non-payment of accelerated payment notices (APNs), confirmed that a reasonable belief that the APNs were invalid could constitute a reasonable excuse for non-payment. Read more
Court of Appeal confirms HMRC can conduct informal enquiries
In JJ Management Consulting LLP v HMRC [2020] EWCA Civ 784, the Court of Appeal confirmed that HMRC can conduct informal enquiries and does not need to open a formal enquiry pursuant to section 9A, Taxes Management Act 1970 (TMA). Read more