Tax update July 2018

In this month’s update we report on new EU transparency rules for tax intermediaries, HMRC’s revised Disguised Remuneration Settlement Terms and the Law Society’s Response to HMRC’s consultation on Tax Avoidance involving profit fragmentation.

News items

EU transparency rules adopted for tax intermediaries
On 25 May 2018, the Economic and Financial Affairs Council formally adopted a Council Directive aimed at boosting transparency rules for tax planning intermediaries.

HMRC extends the deadline for taxpayers who participated in disguised remuneration arrangements to register an interest in settling their tax affairs
On 1 June 2018, HMRC announced that it will continue to allow taxpayers who took part in disguised remuneration arrangements to register an interest in settling their tax affairs. The settlement opportunity was announced on 7 November 2017 and HMRC had set an original deadline of 31 May 2018 for taxpayers to register.

Law Society publishes its response to HMRC’s consultation on tax avoidance involving profit fragmentation
On 15 June 2018, the Law Society published its response to HMRC’s consultation on tax avoidance involving profit fragmentation, which HMRC published on 10 April 2018.

Case reports

Anderson: Upper Tribunal considers knowledge test for the purpose of discovery assessments
In Jerome Anderson v HMRC [2018] UKUT 159 (TC), the Upper Tribunal (UT) has dismissed a football agent’s appeal upholding the First-tier Tribunal’s (FTT) decision to disallow relief for losses incurred in relation to a football academy run by the agent.

Bayonet Ventures: Loan by pension scheme was not an unauthorised payment
In Bayonet Ventures LLP & Anor v HMRC [2018] UKFTT 262 (TC), the FTT, has held that a loan made to a limited liability partnership (LLP) by a pension scheme in which one of the partners of the LLP was a member, was not an unauthorised payment (section 164, Finance Act 2004) and should not be treated as a loan to the partner (section 863, Income Tax (Trading and Other Income) Act 2005 (ITTOIA)) as section 863 only applies if the LLP is carrying on a ‘trade, profession or business with a view to profit’, which it was not.

Dundas: out of time capital allowance claims become valid due to HMRC opening enquiries
In Dundas Heritable Ltd v HMRC [2018] UKFTT 0244 (TC), the FTT has held that a taxpayer was entitled to make, what would otherwise have been out of time capital allowance claims, as a result of HMRC opening enquiries.