Business Tax Briefing

Consultation on tax treatment of predevelopment costs postponed

HM Treasury has postponed a planned consultation, announced as part of the Corporate Tax Roadmap at the Autumn Budget in October 2024, on the tax treatment of predevelopment costs. The consultation was intended to address concerns raised by businesses in response to the Upper Tribunal’s 2023 decision, in HMRC’s favour, in the capital allowances case Gunfleet Sands and others (since renamed Orsted West of Duddon Sands and others). Last month, the Court of Appeal largely allowed the taxpayers’ appeal in that case, holding that most of the disputed predevelopment expenditure, incurred on various preliminary studies and surveys conducted before the taxpayers’ infrastructure projects became operational, was qualifying expenditure incurred “on the provision of” plant and machinery for capital allowances purposes (see previous Business Tax Briefing for details). HM Treasury has postponed the consultation to give the government and businesses time to consider the implications of the Court of Appeal judgment, and will determine next steps “in due course”.

WTGIL Limited: VAT on black box insurance – Court of Appeal

WTGIL Limited (formerly Ingenie Limited) was set up to provide black box insurance to young drivers. It entered into agreements with a panel of insurers, marketed insurance through its own website and through price comparison websites, and engaged Ageas Retail Limited to administer the policies. Policyholders were required to have Ingenie’s telematics devices fitted to their cars, and the information from them would be used to monitor driving behaviour and increase or decrease premiums accordingly. Ingenie made a claim to HMRC to recover VAT incurred on purchasing the devices, which HMRC rejected on the basis that Ingenie was making exempt supplies of insurance intermediation services. The Upper Tribunal had considered that Ingenie was supplying services that were not exempt insurance intermediation services, but as there was no direct link between the services and any consideration provided by the policyholder, there was no taxable supply of services for consideration that entitled Ingenie to recover input tax.

The Court of Appeal has now held that, in providing and fitting the devices, Ingenie was making exempt supplies of insurance intermediation services. The Court referred to “the simple point that telematics car insurance is a form of motor insurance provided in return for an annual premium”, and that Ingenie was acting as an intermediary. This view was supported by the contractual terms and the statutory language of the VAT exemption. Accordingly, Ingenie’s appeal was dismissed, albeit for different reasons than its appeals were dismissed by the Upper Tribunal and the First-tier Tribunal. (Contact: Nicole Faith)

EMEA Dbriefs webcasts

The next EMEA Dbriefs tax webcast is on Tuesday 29 April 2025 at 12.00 BST/13.00 CEST. In Off-payroll working (IR35) – use of technology and key insights, hosted by Rich Barrett, our presenters will discuss ongoing HMRC scrutiny in relation to the IR35 off-payroll working rules. Our panel will discuss the benefits of using technology effectively to mitigate tax risk, and will showcase our soon-to-be released technology, leveraging the latest Generative AI models to identify IR35 tax risk outside of traditional labour agency contracts. The webcast will also cover the latest HMRC updates in the umbrella company space, ahead of changes from April 2026.