19 June 2026
International Controlled Transactions Schedule transfer pricing requirement from 2027
On 16 June 2026, HMRC published a technical consultation on the expected new UK transfer pricing requirement: the International Controlled Transactions Schedule (ICTS). Under the ICTS, entities will provide HMRC with cross-border related-party transactional data in a structured format annually. The rules are expected to apply for accounting periods starting on or after 1 January 2027. Views are sought by 31 July 2026 on draft regulations and a draft statutory notice, setting out the core reporting rules and information requirements. A draft template has also been published, illustrating the information that would need to be filed. For further information, please read our transfer pricing alert.
HMRC announce phased introduction of mandatory benefit in kind payrolling
HMRC have announced that, following extensive engagement with stakeholders, the planned introduction of mandatory PAYE real-time reporting of income tax and Class 1A NICs on certain benefits in kind and taxable expenses from April 2027 will now be phased in. From 6 April 2027, mandatory payrolling will now be introduced only for a small number of benefits in kind (Phase 1), including company car, van, fuel, and medical benefits. Phase 2 will commence from 6 April 2028 and is expected to introduce mandatory payrolling of most other types of benefits in kind (excluding loans and living accommodation benefits which remain voluntary). HMRC have added a new page of guidance on the phased introduction approach to their collection of interim guidance on mandatory payrolling of benefits in kind, with further guidance expected by July 2026.
Supreme Court dismisses HMRC’s and taxpayers’ deferred remuneration arrangement appeals
The Supreme Court has dismissed the appeals of HMRC and the taxpayers in HMRC v HFFX LLP and Atkins and others v HMRC. The judgment focuses on the income tax treatment of payments made by the LLP to individual members via a ‘deferred remuneration arrangement’ involving a Capital Allocation Plan (CAP). The arrangement involved an initial allocation of partnership profits to a corporate member under the CAP, followed several years later by contributions of ‘special capital’ back to the LLP which were then reallocated to individual members for them to withdraw. As was the case at the Court of Appeal in 2024 in HFFX LLP, and in 2023 in the similar case of BlueCrest Capital Management LP, the Supreme Court dismissed HMRC’s arguments that the profits initially allocated to the corporate partner should have been immediately chargeable to income tax as partnership profit shares of the individual members. However, the Supreme Court also dismissed the taxpayers’ arguments that the awards of special capital were not subject to income tax in subsequent periods, agreeing with the Court of Appeal in both HFFX and BlueCrest that the income was within the scope of the charge to income tax on ‘miscellaneous income’. As with the Court of Appeal, the Supreme Court declined to address alternative arguments put forward by HMRC based on the income tax ‘sales of occupation income’ rules.
Upper Tribunal refuses HMRC appeal on whether an LLP was ‘carrying on a business’
The Upper Tribunal has dismissed HMRC’s appeal, and the taxpayers’ cross-appeal in the Limited Liability Partnership (LLP) decision HMRC v GCH Corporation Ltd and others. The case considers section 59A Taxation of Chargeable Gains Act 1992 which allows for a UK LLP to be treated as a tax transparent entity for UK chargeable gains and capital gains tax purposes but only if it “carries on a trade or business with a view to a profit”. (Equivalent LLP tax transparency rules, with similar conditions, can be found in section 1273 Corporation Tax Act 2009 and section 863 Income Tax (Trading and Other Income) Act 2005). HMRC considered that the statutory condition was not satisfied in the taxpayers’ circumstances, with the result that one of the appellants, an LLP, should have been taxed as an opaque/non-transparent entity, affecting the tax treatment of assets contributed to the LLP by the other appellants, who were members of the LLP.
In 2024, the First-tier Tribunal (FTT) applied case law on the meaning of “carrying on a trade” and “carrying on a business with a view to a profit” to the activities of the LLP. After applying the standard ‘badges of trade’ analysis approach to its findings of fact, the LLP’s activities, which involved making a return from a small number of investments and dealings in a small number of listed shares over a relatively short period of time, were found to be insufficient to be a trade. However, the FTT considered the activities were sufficient to be a “business carried on with a view to a profit,” and as a result, the LLP was tax transparent and the taxpayers’ returns were correct. The Upper Tribunal has now unanimously agreed with the FTT, finding no good reasons to disturb its findings and evaluative conclusions on either of these matters.
HMRC publish MLI synthesised text of UK tax treaty with South Africa
HMRC have published a new ‘synthesised text’ showing how the operation of the 2002 UK-South Africa Double Taxation Convention has been modified by the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (the MLI).
Bolt Services UK Limited: Application of TOMS to ride-hailing services – Court of Appeal
The Court of Appeal has agreed with HMRC that supplies by Bolt Services UK Limited of private hire vehicle ride-hailing services did not fall within the tour operators’ margin scheme (TOMS). The Upper Tribunal and First-tier Tribunal had previously held that Bolt’s supplies were within TOMS. HMRC appealed against the FTT and UT decisions, and the Court of Appeal has accepted HMRC’s primary argument that, contrary to the ‘high-level’ approach taken by the FTT and UT, the correct approach when considering the application of TOMS is to ask whether the supply in question is identical or at least comparable to the supplies of tour operators and travel agents. The Court found that Bolt’s services were not identical or comparable. Comparability must be assessed by reference to the aims of TOMS, namely that of preventing distortions of competition and inconsistent VAT treatment for truly similar services. HMRC’s secondary argument was that the FTT and UT had erred in concluding that the supplies made by drivers to Bolt were not ‘materially altered’ by Bolt and that Bolt’s supplies to its customers were not ‘in-house’ supplies. If the supplies were materially altered or in-house supplies, they would be outside the scope of TOMS. Given the Court’s conclusion on the primary argument, it did not need to consider HMRC’s secondary argument and it allowed HMRC’s appeal. (Contact: Donna Huggard)
EMEA Dbriefs webcasts
The next EMEA Dbriefs webcast will take place on Thursday 25 June 2026 at 12.00 BST/13.00 CEST. In The EU Directive on Faster and Safer Relief of Excess Withholding Taxes (FASTER), our panel will discuss how changes to streamline and digitise withholding tax relief processes, to be introduced under the new EU FASTER Directive, are expected to improve the withholding tax process for investors into EU member states. We will discuss how the financial services industry will be affected by these changes, the three key pillars of compliance with FASTER, other local regimes being implemented, and how financial intermediaries may need to plan for these reforms.