Monthly Tax Update

‘L-Day’ announcements and HMRC’s Transformation Roadmap

On 21 July 2025 (‘L-Day’), the government published a number of draft clauses intended for the next Finance Bill for technical consultation. The draft clauses are accompanied by explanatory and impact notes, and comments from stakeholders are invited by 15 September 2025. The Exchequer Secretary to the Treasury, James Murray MP, also issued a written ministerial statement summarising the draft legislation published and “making announcements in a small number of technical areas of tax policy to ensure the effective maintenance of the tax system”. Please see our article for a full summary of the L-Day announcements.

Draft legislation and other announcements included: 

• Reform of the tax treatment of carried interest – draft legislation was published for the new carried interest regime that will come into effect from 6 April 2026. Read more in our alert. 

• Multinational Top-up Tax and Domestic Top-up Tax – draft legislation was published covering a number of areas, designed to bring the UK legislation up to date with the latest OECD Inclusive Framework commentary. In addition, it corrects or clarifies some technical points within the existing UK legislation.
• Tackling non-compliance in the umbrella company market – draft legislation was published that would make employment agencies joint and severally liable for amounts payable under PAYE where workers are supplied via umbrella companies. Where there is no agency, the joint and several liability would fall to the end client business. Further legislation is to be introduced giving HM Treasury the power to make regulations imposing an equivalent joint and several liability for NIC purposes.
• Land Remediation Relief – HM Treasury published a new consultation on the design and impact of Land Remediation Relief (LRR). The consultation closes on 15 September 2025.

Also on 21 July 2025, the government published HMRC’s Transformation Roadmap. The roadmap sets out the actions HMRC will take to achieve each of their three priorities set by the government: improving day-to-day performance and the customer experience; closing the tax gap; and reforming and modernising the tax and customs system. Of particular note to businesses is HMRC’s confirmation that they do not intend to introduce Making Tax Digital for Corporation Tax (CT), which would have required companies to provide quarterly electronic updates. Instead, HMRC will develop “an approach to the future administration of CT that is suited to the varying needs of the diverse CT population” and will work with stakeholders to identify potential changes for consultation.

HMRC publish annual report and accounts for 2024/25

On 17 July 2025, HMRC published their Annual Report and Accounts for the year to 31 March 2025. The section of the report on performance notes that HMRC collected revenues of £875.9 billion in 2024/25, which represents an increase of 3.9% on the previous year. HMRC exceeded their £45.4 billion target for ‘compliance yield’ for 2024/25 – collecting or protecting £48 billion of tax revenues that would otherwise have been lost through error, fraud and other forms of non-compliance. The section also reports on HMRC’s progress towards improving customer experience. While customer satisfaction for digital contact remained above 80% in 2024/25, customer satisfaction for taxpayers using telephony contact was 47.5%.

Other reports published by HMRC along with their Annual Report, included a statistical note looking at the results of HMRC’s Large Business Directorate in 2024/25. This note breaks down key compliance yield and ‘tax under consideration’ statistics for large business taxpayers between different taxes, areas of inaccuracy, countries of groups’ ultimate parents, and economic sectors.

HMRC write to businesses with open unallowable purpose enquiries

If it applies, the loan relationships for unallowable purposes rule (sections 441 and 442 Corporation Tax Act 2009) can deny corporation tax relief for debits, such as interest expenses, arising on a loan relationship. In May 2025, HMRC updated their guidance on the unallowable purpose rule to include HMRC’s summaries of recent relevant case law. HMRC are now writing to taxpayers with open section 441 enquiries, asking them to consider their position in light of the recent Court of Appeal decisions. The letter offers affected taxpayers the opportunity to discuss their enquiry with HMRC and explore whether an agreement can be reached to resolve it. If you receive such a letter and would like to discuss it further, please speak to your usual Deloitte contact or Gemma Marshall or Tammy Arendse.

UK lists of countries with qualified status for Pillar Two purposes updated  

HMRC have published a notice specifying Spain and Guernsey as Pillar Two territories with a qualified income inclusion rule and a qualifying domestic top-up tax (QDMTT) that meets safe harbour standards. HMRC’s notice has retrospective effect from 31 December 2023 (Spain) and 1 January 2025 (Guernsey). The notice follows regulations made by HM Treasury earlier in 2025 to specify initial lists of Pillar Two territories and QDMTTs. The notice brings the UK lists in line with the latest version of the OECD Inclusive Framework’s central record, updated in March 2025, of jurisdictions whose local implementation of the Pillar Two rules have so far been assessed as ‘qualified’.

OECD publishes updated transfer pricing country profiles

The OECD has published updated transfer pricing country profiles reflecting the current transfer pricing legislations and practices of various countries. According to the OECD, the profiles focus on countries' domestic legislation regarding key transfer pricing aspects, including the arm's length principle, methods, comparability analysis, intangible property, intra-group services, cost contribution agreements, documentation, administrative approaches to avoiding and resolving disputes, safe harbours and other implementation measures. The updated profiles include new sections on the simplified and streamlined approach for baseline marketing and distribution activities (resulting from the work on Amount B of Pillar One) and the transfer pricing treatment of hard-to-value intangibles. Updated profiles have been published for Austria, Belgium, Canada, Ireland, Latvia, Lithuania, Mexico, the Netherlands, New Zealand, Singapore, South Africa, and Spain.

D.E.L.T.A. Merseyside v Uber Britannia: Regulation of private hire vehicles – Supreme Court

The Supreme Court has issued its judgment in D.E.L.T.A. Merseyside Limited and another v Uber Britannia Limited, confirming that private hire vehicle operators (PHVOs) can operationally structure themselves as agents under the Local Government (Miscellaneous Provisions) Act 1976 concerning the regulation of private hire vehicles outside of London. While this is a regulatory case, it has consequences on the commercial models, and thus the VAT outcomes, available to PHVOs. This now results in a misaligned national position, following the earlier High Court decision concluding that PHVOs are obliged to be structured as principals under the equivalent regulations applicable in London (which was not appealed). In April 2024, HMRC issued a consultation on the VAT treatment of private hire vehicles. The consultation closed in August 2024 and it remains to be seen what impact this Supreme Court judgment will have on the government’s approach in this area. Also outstanding is the application of the tour operators’ margin scheme (TOMS) to the sector, which will be considered by the Court of Appeal in Bolt Services UK Limited next year.