Business Tax Briefing

OECD release statistics on use of tax incentives to promote research and development  

The OECD published a statistical release on 22 April 2025, looking at the key role tax incentives play in supporting innovation across most OECD and other major economies. 34 of 38 OECD member countries offered R&D tax relief in 2024, with only Costa Rica, Israel, Latvia, and Luxembourg lacking expenditure-based incentives. 23 member countries provided more support for business R&D through tax incentives than through direct support, and across the OECD tax incentives made up almost 55% of total government support for business R&D. The total R&D tax relief granted by the UK, at 0.30% of UK GDP, was third highest among the countries surveyed, behind only Portugal (0.39%) and Iceland (0.38%). Looking at direct and tax support combined, Iceland (0.52%), Portugal (0.46%) and France (0.42%) provided the most financial support for business R&D relative to GDP, with the UK as fifth highest (0.40%).

First-tier Tribunal allows taxpayer appeal on SDLT repayment time limits

The First-tier Tribunal has allowed the taxpayer’s appeal in the stamp duty land tax (SDLT) case Candy v HMRC. The decision concerns a claim for overpayment relief where SDLT was suffered on a ‘substantially performed’ conditional land purchase contract and where the contract’s condition failed to be met more than a year afterwards. The taxpayer attempted to claim relief directly under section 44(9) Finance Act 2003, which permits a repayment of SDLT where a contract is subsequently “rescinded or annulled, or for any other reason not carried into effect”. Section 44(9) however specifies that the repayment “must be claimed by amendment” to the return. In 2022, the Court of Appeal unanimously held that section 44(9) did not operate as an exception to the normal 12-month time limit for amending SDLT returns, and so dismissed this claim.

The taxpayer however had also made an alternative claim for relief under SDLT’s ‘overpayment relief’ provisions (Paragraph 34 Schedule 10 Finance Act 2003). Similar overpayment relief rules can apply to corporation tax, income tax and capital gains tax, and these can provide a statutory backstop for obtaining a refund of overpaid tax if all other statutory relief provisions have been exhausted. HMRC argued that the requirement for an amendment to an SDLT return in section 44(9) also prevented the taxpayer from obtaining equivalent relief via overpayment relief. The First-tier Tribunal has now disagreed, concluding that this requirement was specific to section 44(9) claims. In its view, allowing overpayment relief in these circumstances was within the natural meaning and intended purposes of the overpayment relief legislation. As all other conditions had been met, the alternative claim was allowed.

JD Wetherspoon plc: application of the temporary reduced rate to cider during COVID

In order to support the hospitality industry during COVID the Value Added Tax (Reduced Rate) (Hospitality and Tourism) (Coronavirus) Order 2020 (SI 2020/728) (‘the Order’) introduced a reduced rate of VAT for certain restaurant and catering services (as enacted in Group 14, Schedule 7A, Value Added Tax Act 1994). The Order specifically excluded “alcoholic beverages”, which were defined as beverages which were subject to excise duty as spirits, beer, wine or made–wine, but the definition did not expressly refer to cider. In May 2022 JD Wetherspoon submitted a claim for overdeclared output tax on supplies of cider during the relevant period (15 July 2020 to 31 March 2022) which it subsequently contended were eligible for the reduced rate. HMRC rejected the claim on the basis that having regard to the purpose and context of the Order, it should be interpreted as including cider. In a lengthy 72-page decision, the First-tier Tribunal (FTT) has rejected the taxpayer’s appeal.

The FTT held that the language used in the Order’s definition of “alcoholic beverages” could not be construed as to include cider. However, the FTT held that authorities had demonstrated that the courts have the power to correct obvious drafting errors in legislation in certain narrowly-defined circumstances (the ‘Inco principle’). As such, the definition of “alcoholic beverages” should be treated as including cider, as well as the other alcoholic beverages specifically referenced. The taxpayer’s appeal was therefore dismissed. The FTT also held that the UK legislation must be compatible with the principles of EU law (including fiscal neutrality) and that a conforming interpretation is required, and that entails the addition of a reference to “cider” in the definition of “alcoholic beverages”. (Contact: Kendra Hann)

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.