Corporate Tax Update - October 2020

Published on 16 October 2020

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 September 2020. Included in this update are summaries of the Chancellor’s tax announcements as part of the Winter Economy Plan and the EC’s decision to appeal the decision of the European General Court in the Apple state aid case. There are also updates on new HMRC guidance on off-payroll working for private businesses and the VAT treatment of payments for early termination of contracts. As ever we hope you, your family and friends are all staying safe.

Business Asset Disposal (BAD) Relief – CGT manual updated

Towards the end of September, HMRC updated its published Capital Gains Manual following the changes to Entrepreneurs’ Relief (ER) announced earlier this year. By way of reminder, at the Spring Budget in March an immediate reduction in the ER lifetime limit from £10m to £1m was announced. So-called ‘anti-forestalling’ rules were also announced to prevent pre-Budget tax planning from allowing sellers to retain the £10m limit. At the same time, the name of the relief was changed from ER to Business Asset Disposal Relief.  Read more

European Commission to appeal General Court’s judgment in Apple state aid case

On 25 September 2020, the European Commission (EC) published a statement by Margrethe Vestager (Executive Vice-President) (MV) on the EC’s decision to appeal the General Court’s judgment on the Apple state aid case.  Read more

Winter Economy Plan – VAT and self-assessment taxpayer announcements

On 24 September 2020, the Chancellor announced the Government’s Winter Economy Plan. He had already announced the cancellation of the planned Autumn 2020 Budget. The Plan is designed to protect the UK economy as the country enters into a winter dominated by the COVID-19 pandemic.  Read more

UK and Austria enter into agreement for relief from Austrian dividend withholding tax

On 18 September 2020, HMRC published a “competent authority agreement” between the UK and Austria. This agreement sets out the process to be followed in order to claim relief at source from Austrian withholding taxes on dividends paid to a UK parent company.  Read more

Off-payroll working rules from April 2021 – updates to HMRC manual

On 17th September 2020, HMRC updated its Employment Status Manual. The updates address the extended ‘off-payroll working’ rules for medium and large private sector businesses (with effect from 6 April 2021).  Read more
HMRC Debts (priority on insolvency) – Regulations made

On 11 September 2020, the Insolvency Act 1986 (HMRC Debts: Priority on Insolvency) Regulations 2020 were made. The Regulations will come into force on 1 December 2020.  Read more
OTS extends deadline for CGT call for evidence

On 8 September 2020, the Office of Tax Simplification (OTS) announced an extension of the deadline for providing detailed comments on its call for evidence on capital gains tax (CGT, published on 14 July 2020). Detailed comments are now sought by 9 November 2020.  Read more
HMRC issue new guidance on VAT treatment of early termination fees and compensation

On 2 September 2020, HMRC published Revenue & Customs Brief 12 (2020). At the same time it updated the VAT Supply and Consideration Manual. The Brief and updated guidance sets out HMRC’s view that fees and compensation paid for early termination of a contract will, typically, be consideration for a supply (subject to VAT).  Read more



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