Business Tax Briefing

A weekly round-up of corporate, employment and indirect tax news


COVID-19: how HMRC will continue to support taxpayers; joint and several liability

HMRC have updated their policy paper COVID-19: how HMRC will continue to support customers and the economy. The revised paper states inter alia that HMRC are reviewing which COVID-19 measures are still needed, which are no longer necessary and which they should keep as a permanent improvement to the way the tax system operates. It also states that HMRC’s data and risk experts checked Coronavirus Job Retention Scheme (CJRS) and Self-Employment Income Support Scheme (SEISS) claims for signs of criminal activity and blocked suspicious claims.

HMRC have also published guidance on how they deal with taxpayers who receive a joint and several liability notice for a company that has received COVID-19 support payments, including the conditions that must be met before such a notice is given and safeguards. Such a notice makes the individuals jointly and severally liable for income tax charged under FA 2020 Sch 16 para 8 (the charge that arises if persons have received a COVID-19 support payment to which they were not entitled).

Late elections for Pension Protection and HMRC discretion: Upper Tribunal

The Upper Tribunal has dismissed the taxpayers’ appeal in Executors of David Harrison & another v HMRC. Following changes to pensions taxation in 2012, the taxpayers submitted late notices to elect for fixed protection for their pensions lifetime allowance. HMRC chose not to accept the taxpayers’ notices, and the taxpayers appealed to the First-tier Tribunal (FTT), seeking to challenge HMRC’s exercise of their discretion. The decision largely concerns the scope of Regulation 7 of The Registered Pension Schemes (Lifetime Allowance Transitional Protection) Regulations 2011 (appeal against refusal to accept notice) and whether the statutory appeal under that regulation includes examining whether HMRC should have exercised their discretion to accept a late notification, or whether it provides for more limited grounds of appeal. The FTT held that it had jurisdiction to examine the discretion issue, though it held that, on the facts, HMRC had exercised their discretion appropriately and so dismissed the taxpayers' appeal. The Upper Tribunal however held that the FTT had no jurisdiction to consider the exercise of HMRC’s discretion; it has no inherent judicial review jurisdiction, but only the powers conferred on it by statute.

Deloitte/IfG event: Reaching net zero is the tax system ready?

On Monday 22 November, from 1pm to 2pm, Deloitte is participating in a live webcast by the Institute for Government (IfG) titled Reaching new zero - is the tax system ready?. The event will ask how the government should adapt the tax system to reach net zero, look at the steps being taken in other countries, and consider how best to overcome barriers – political and otherwise – to reform. Dr Gemma Tetlow, Chief Economist at the IfG, will be joined by Amanda Tickel, Deloitte UK’s head of tax and trade policy, David Gauke (former Financial Secretary to the Treasury), James Murray MP (Shadow Financial Secretary); and Chris Stark (Chief Executive of the Committee on Climate Change). For more details, and to register for the webcast, see here.

Mauritania joins G20/OECD Inclusive Framework

The OECD has announced that Mauritania has joined the G20/OECD Inclusive Framework on BEPS, becoming its 141st member. The jurisdictions of the BEPS Inclusive Framework are, amongst other things, committed to implementing/maintaining BEPS minimum standards in the areas of country-by-country reporting to tax authorities, dispute resolution, treaty abuse and harmful tax practices. The list of the 141 participating jurisdictions as of 4 November 2021 is here.

Mauritania has also committed to addressing the tax challenges arising from the digitalisation of the economy by joining the two-pillar plan to reform the international taxation rules. This brings the total number of jurisdictions participating in the agreement to 137. These jurisdictions are listed here.

Forthcoming Dbriefs webcast

On Tuesday 16 November 2021 at 12.00 GMT/13.00 CET there is a Dbriefs webcast on the topic of Notification Of Uncertain Tax Treatments: How Can Businesses Prepare? The presenters are Mark Kennedy, Chris Gault, David Walters, Beth Slayden and Arfan Iqbal. The Notification of Uncertain Tax Treatment rules will require certain significant tax uncertainties to be notified to HMRC. Our Dbriefs webcast explains the rules. If you would like to register for the webcast you can do so here.

Commons Library briefings: business rate reliefs in the Budget; Autumn Budget 2021

The October 2021 Budget contained several reliefs from business rates that will apply in England in the 2022/23 financial year. It also included government plans for further changes to the business rates system. The House of Commons Library has published an Insight alert on the business rate reliefs in the October Budget. It has also published a general research briefing on the Autumn Budget 2021 and Finance (No.2) Bill 2021-22.

VAT: lease and leaseback of self-storage: First-tier Tribunal

SFML developed a building in Nottingham into self storage units. It leased the units to investors for 999 years for a premium, and almost all of the investors leased their units back to SFML for six years (SFML guaranteed an initial 8% return). HMRC assessed SFML on the basis that it was providing self storage facilities to the investors (as well as to short term customers under the leaseback) and should have charged them VAT. However, the First-tier Tribunal has ruled that the ultimate use of the units for self storage did not characterise the grant of the 999-year lease to the investors. The premiums were not therefore subject to VAT as the ‘grant of facilities for the self storage of goods’. In addition, having considered how the building was fitted-out with the units (pods), how difficult it would be to move them around, and how each investor had a property interest registered at the Land Registry, the First-tier Tribunal also concluded that SFML was supplying immoveable property that formed part of the building. SFML’s supplies to investors were exempt, and its appeal was allowed.

VAT: ‘true beneficiaries’ of boathouse: First-tier Tribunal

Cambridge University Boathouse Ltd (CUBL) built a boathouse at Ely for £5m which it licences to the university’s three elite rowing clubs, which are dedicated to beating Oxford in the boat race each year. The construction was funded through donations and loans, with the licence fee generating just enough revenue to cover the boathouse’s maintenance and utilities costs. HMRC denied input tax recovery on the construction, on the basis that the licences fell within the sporting exemption. The First-tier Tribunal has ruled, however, that the licence was granted to the clubs and not to the individual rowers who were members of the clubs. For example, CUBL provided storage for the expensive boats that belonged to the clubs, but rowers were not allowed to store their own kit or equipment there. The sporting exemption only applied if the ‘true beneficiaries’ of CUBL’s supply were the rowers. The First-tier Tribunal held that CUBL had granted rights to the clubs and not to the rowers, and therefore its supply was not exempt under the sporting exemption, and CUBL was not barred from recovering input tax on that basis.