14 June 2024
On 22 May 2024, the Prime Minister, Rishi Sunak, announced that a UK General Election will be held on Thursday 4 July 2024, and Parliament was formally dissolved on 30 May 2024.
MPs will be summoned to meet on 9 July 2024 and the first State Opening and King’s Speech of the new Parliament, in which the elected Government will set out its planned legislative programme for the first parliamentary session, will be held on 17 July 2024.
General Election manifestos started to be published this week, including the manifestos of the Labour Party, the Conservative Party, the Liberal Democrats, and the Green Party of England & Wales. Further manifestos are expected to be published next week, including the manifesto of Reform UK, an initial draft version of which was published earlier this year.
On Thursday 20 June 2024, at 14:30 BST/15:30 CEST, there will be an EMEA Dbriefs webcast titled UK General Election 2024. Our panel will discuss the tax policy and trade aspects of the manifestos and look at how the election may affect your business.
After an accelerated process due to the calling of the General Election, the Finance Bill introduced following March’s Spring Budget – Finance (No. 2) Bill 2023-24 – completed all of its remaining Commons and Lords stages in the days following the Prime Minister’s announcement and it received Royal Assent on 24 May 2024. No amendments were made to the Bill at any stage. The text of the Act – Finance (No. 2) Act 2024 – has been published online in PDF here and in HTML here.
Registration with HMRC is required for groups within the scope of the Pillar Two global minimum tax in the UK within six months of the end of the group’s first accounting period starting on or after 31 December 2023. For example, for in-scope December year-end businesses, registration will be required by 30 June 2025. On 20 May 2024, HMRC published a statutory notice and a supporting guidance page setting out how businesses within the scope of the UK’s Pillar Two top-up taxes (Multinational Top-Up Tax and Domestic Top-Up Tax) can register for these taxes with HMRC. The guidance also sets out the information that will need to be provided to HMRC upon registration.
Meanwhile, the Belgian tax administration has announced that groups within the scope of the Pillar Two rules with a presence in Belgium will need to comply with Belgium’s Pillar Two registration requirements by a very early strict deadline of the later of 13 July 2024 or 30 days after the start of a group’s first Pillar Two reporting year starting after 31 December 2023. This means that, for in-scope December and March year-end businesses, the registration notification form will need to be submitted by 13 July 2024. Please see Deloitte Belgium’s alert for further details, including details on the extensive information that will need to be included in the Belgian notification form.
The governments of Guernsey, Jersey, and the Isle of Man have released public statements in relation to their local implementation of the Pillar Two global minimum tax rules. These statements reconfirm the Crown Dependencies’ shared commitment to the G20/OECD Inclusive Framework’s approach, and confirm that they will shortly be commencing the introduction of legislative procedures with effect for the accounting periods of in-scope groups commencing on or after 1 January 2025. The government of Guernsey proposes to introduce an income inclusion rule (IIR) and a Qualified Domestic Minimum Top-Up-Tax (QDMTT). Jersey intends to introduce an IRR together with a new standalone domestic ‘Multinational Corporate Income Tax’ (MCIT) that will align with the Inclusive Framework’s Model Rules. The Manx government has confirmed its intention to introduce a QDMTT and a final decision on whether to implement an IIR will be taken later in 2024. More details can be found in alerts from Deloitte Guernsey, Jersey and Isle of Man respectively.
HMRC have updated their Corporation Tax online service guidance page, with details of an issue affecting corporation tax returns (CT600s) filed by certain ‘small’ non-UK resident companies. The issue relates to the reintroduction, from 1 April 2023, of the 19% small profits rate and marginal relief. HMRC note that non-resident companies without a UK permanent establishment are not entitled to the small profits rate or marginal relief, but that a small percentage of filings have incorrectly reflected the rate or relief. The online service will be updated in April 2025 to prevent this issue. In the meantime, HMRC provide guidance on how to ensure that the main rate of corporation tax (25%) is applied to such companies, and state that correction notices will be issued if HMRC identify errors in returns already filed.
A number of announcements relating to the UK’s double tax treaties were made in May including:
On 24 May 2024, HMRC announced the new advisory fuel rates for company cars applicable from 1 June 2024. The previous rates, effective from 1 March, can be used for up to one month from the date the new rates apply. Compared to the previous rates, the advisory rates for diesel engines each increased by 1p. The advisory fuel rates for petrol engines sized up to 2000cc increased by 1p each, and the petrol rate for larger engines increased by 2p. Rates for liquefied petroleum gas (LPG) were unchanged from the previous quarter. The advisory rate for fully-electric cars decreased from 9p to 8p per mile.
To fund the development of a new hotel in Milton Keynes, Hotel La Tour Ltd (HLT) decided to sell its existing hotel in Birmingham by way of the sale of shares in the subsidiary which owned it. HLT sought to recover the VAT incurred on the marketing and legal costs associated with the sale on the basis that the relevant services were directly and immediately linked to its downstream taxable activities, namely developing and operating the new Milton Keynes hotel. HMRC denied recovery on the basis that the costs related to the exempt share sale. Both the First-tier Tribunal and Upper Tribunal found in favour of the taxpayer. However, on appeal, the Court of Appeal has unanimously found in favour of HMRC. On revisiting the CJEU’s decision in AB SKF, Lady Justice Whipple held that this judgment preserved the existing rules on direct attribution, but acknowledged that input tax connected with a share sale may have a direct and immediate link either with the share sale or with the taxpayer’s business as a whole, that being a matter for the domestic court to determine. Distinguishing Frank A Smart (which related to a non-business activity), and rejecting the contentions that it was necessary to look at the purpose of the share sale (i.e. fundraising) and that the existence of a VAT group meant that HLT was not engaged in an economic activity, HMRC’s appeal was allowed. The VAT on the costs were used in, were cost components of, and were directly and immediately linked with the share sale which was conducted as part of HLT’s economic activity and exempt for VAT purposes. (Contact: Tim Churchill)
We have a number of Dbriefs webcasts over the next month including: Your global workforce footprint – optimal structures and approaches (19 June 2024), UK General Election (20 June 2024) and Payroll perspectives: navigating the global talent landscape (17 July 2024). For more information, and to view recent webcasts on demand, please visit our Dbriefs website.