21 March 2025
A reminder that the Office for Budget Responsibility (OBR) will publish its next economic and fiscal forecast on Wednesday 26 March 2025. The Chancellor of the Exchequer, Rachel Reeves, will respond with a parliamentary statement on the same day. For insights on any taxation announcements made on the day, visit our dedicated webpage. There will be an EMEA Dbriefs webcast on the Spring Statement and OBR forecast on Thursday 27 March 2025 at 15.00 GMT/16.00 CET.
The remaining Lords stages of Finance Bill 2024-25 took place on 19 March 2025. The Lords do not amend Finance Bills, and so the Bill was approved unamended from the version passed by the Commons on 3 March 2025.
The Bill received Royal Assent yesterday and has been published as Finance Act 2025.
The Court of Appeal has largely ruled in favour of the taxpayers in the capital allowances case of Orsted West of Duddon Sands (UK) Limited, Gunfleet Sands Limited and others v HMRC. The taxpayers own and operate offshore windfarms, and the key issue in the case concerned whether expenditure on various studies, including surveys, conducted before the windfarms became operational, constituted qualifying expenditure “on the provision” of plant and machinery for the purposes of section 11 Capital Allowances Act 2001. The First-tier Tribunal initially allowed some of the disputed expenditure as qualifying for capital allowances, but the Upper Tribunal overturned this decision in 2023, finding that none of the expenditure was qualifying.
The Court of Appeal has disagreed with the stricter interpretation adopted by the Upper Tribunal. It found that the taxpayers’ expenditure on studies informing the design or installation of plant qualified for capital allowances, even if not directly involved in the physical construction. The Court’s interpretation of “on the provision” went further in favour of the taxpayers than the initial First-tier Tribunal decision by also including expenditure on studies that influenced design choices, even if they did not lead to changes in the design of the plant.
The Court of Appeal upheld, in favour of HMRC, two secondary aspects of the Upper Tribunal’s decision. It rejected an alternative argument of the taxpayer that any of the disputed expenditure not “on the provision” of plant and machinery should be considered revenue and not capital in nature and thus could be deductible as pre-trading revenue expenditure under section 61 of the Corporation Tax Act 2009. The Court also dismissed arguments that deficiencies in how HMRC’s position had been reflected in the self-assessment closure notices issued to the taxpayers meant that the Tribunal did not have the jurisdiction to adjust the amounts of qualifying expenditure incurred in the company tax returns to be in line with its decision. (Contact: Peter Millwood or Adam Cook)
In February 2025, HMRC updated their pages on GOV.UK to record the UK government’s intention to suspend the UK’s double taxation conventions with Russia and Belarus. This followed treaty article suspensions announced by the governments of Russia and Belarus in 2023 and 2024 respectively.
The Double Taxation Relief (Russian Federation) (Revocation) Order 2025 (SI 2025/344) and the Double Taxation Relief and International Tax Enforcement (Belarus) (Revocation) Order 2025 (SI 2025/345) have now been made. As a result, both double tax conventions will cease to have effect in UK law with effect from 1 April 2025 for corporation tax and similar taxes, and from 6 April 2025 for income tax and capital gains tax and similar taxes. According to HMRC, the terms of the treaties will continue to apply in the UK for earlier periods.
The Windsor Framework established a new set of arrangements for sending parcels from Great Britain to Northern Ireland, which were to come into effect from 30 September 2024, but were postponed. HMRC have now announced that the new arrangements will take effect from 1 May 2025.
The arrangements will depend upon the type of parcel and on whether the parcel is being sent by a business or an individual. Parcel carriers authorised under the UK Carrier Scheme can move eligible consumer parcels from GB to NI without completing customs or safety and security declarations. Eligible parcels sent from a business in GB to a business in NI can be moved under the simplified processes for Internal Market Movements, meaning that they do not require a full customs declaration and no customs duty would be charged.
The next EMEA Dbriefs tax webcast is on Tuesday 25 March 2025 at 13.00 GMT/14.00 CET. Hosted by Alison Lobb, in Update On Latest Pillar Two Developments, our presenters will look at the continuing work of the G20/OECD Inclusive Framework on technical and administration aspects of the Pillar Two global minimum tax rules, and will discuss the most recent Pillar Two-related documents issued by the Inclusive Framework.