16 May 2025
HMRC update guidance on loan relationship unallowable purpose rule
On 7 May 2025, HMRC updated their guidance, contained within pages CFM38100 to CFM38200 of HMRC’s Corporate Finance Manual, on the loan relationships for unallowable purposes rule (sections 441 and 442 Corporation Tax Act 2009). If it applies, the unallowable purpose rule can deny corporation tax relief for debits, such as interest expenses, arising on a loan relationship. The updates to the pages include HMRC’s summaries of recent relevant case law, including key unallowable purpose rule Court of Appeal judgments handed down in 2024. It also includes HMRC’s views on how debits could be attributed to an unallowable purpose under the rule’s ‘just and reasonable apportionment’ requirement.
OECD Inclusive Framework publishes updated consolidated version of Pillar Two commentary
The OECD/G20 Inclusive Framework has published an updated consolidated commentary to the Pillar Two model global minimum tax rules. The previous version of the Pillar Two commentary, released in April 2024, has been updated for administrative and other guidance approved and published by the Inclusive Framework up to the end of March 2025, including the Agreed Administrative Guidance on Pillar Two published in June 2024 and January 2025. Please see Deloitte Tax@Hand for more details.
Submission of final VAT returns – Regulations
The Value Added Tax (Amendment) Regulations 2025, with an accompanying tax and information note, amend the Value Added Tax Regulations 1995 (the VAT Regulations) to provide HMRC with the power to extend the time in which a business can submit its final VAT return. Under regulation 25(4) of the VAT Regulations, a business that ceases to be liable or entitled to be VAT registered must submit its final VAT return within a month of the date the cancellation takes effect, with an additional week for electronic returns. Payment is due on the last day on which the return is due. In practice, HMRC processing can delay the issue of the final return, meaning that businesses are not able to meet the submission and payment deadlines, and would potentially incur penalties and interest. Accordingly, HMRC have historically extended the time limit by administrative concession. The new regulations provide a regulatory basis for this extension, with a new regulation 25(4AA). The regulations will come into force on 13 June 2025. (Contact: Andrew Clarke)
EMEA Dbriefs webcasts
The next EMEA Dbriefs tax webcast is on Wednesday 21 May 2025 at 12.00 BST/13.00 CEST. In Carve-outs – tax and legal structuring – key design considerations, hosted by Simon Hill, our presenters will discuss business carve-out transactions, which can generate significant shareholder value but can be highly complex to deliver, both commercially and from a tax and legal perspective. This webcast will focus on the main tax and legal considerations to address when designing the structure for a business carve-out, including common practices and pitfalls.
On Thursday 22 May 2025, at 12.00 BST/13.00 CEST, is a Dbriefs webcast titled Accessing Horizon Europe funding for UK organisations and institutes. Hosted by Hazel Gray, our presenters will discuss Horizon Europe, the EU’s key programme for funding research and innovation. Since 1 January 2024 the United Kingdom has been an associated country, meaning UK organisations and institutes have the same access to the programme as EU member states. The webcast will cover how Horizon Europe is set up, its basic eligibility criteria, what an application looks like, and best practices for preparing a strong bid.