1 November 2024
Autumn Budget
The Chancellor of the Exchequer Rachel Reeves MP delivered her Autumn Budget on 30 October 2024. Analysis of the tax announcements can be found on our dedicated Budget website here, including our commentary on individual measures. A recording of our Dbriefs webcast on the Budget is available to watch on demand here.
HMRC’s overview of the tax legislation and rates (OOTLAR), which lists the tax policy measures announced, generally shows how and when they will be legislated, and includes links to relevant tax information and impact notes is here.
Alongside the Budget, the government published a Corporate Tax Roadmap setting out its general approach to corporate tax matters for the course of this parliament. The Roadmap confirms commitments to maintaining key features of the UK corporate tax system, including capping the main rate of corporation tax at 25% for the duration of the parliament, and maintaining reliefs on capital expenditure, research and development and intangible assets. It also highlights several areas where the government will be exploring change and includes details on consultations expected in the coming months, including a future consultation on a new process to give investors in major projects increased advance tax certainty. Read more here.
Treasury Committee appointed, Budget hearings next week
The House of Commons has formally appointed the 11 members of the Commons Treasury Committee. Dame Meg Hillier MP (Labour) was elected unopposed as the Committee’s chair in September. The other appointed members comprise six Labour MPs, two Conservative MPs (including previous Chair Dame Harriett Baldwin MP) and two Liberal Democrat MPs. The new committee will hold its first oral evidence hearings of this parliament next week on the topic of the Autumn Budget. This will include a hearing with the Chancellor of the Exchequer and Treasury representatives from 14:30 on Wednesday 6 November 2024.
HMRC guidance statutory clearance for a transaction
On 29 October 2024, HMRC amended their online guidance on applying for statutory tax clearances. A new page, Apply for statutory clearance for a transaction, contains best practices for preparing and submitting applications for tax clearances from HMRC under certain statutory provisions relating to transactions, for example, for advanced clearance under section 138 Taxation of Chargeable Gains Act 1992 (TCGA 1992) that a transaction is not prevented from qualifying for share reorganisation tax treatment. Whilst much of the content has been moved from existing guidance pages, the page includes a new section, What to include in your application, containing requirements and best practice recommendations for supporting information to be included in such clearance applications.
First-tier Tribunal allows taxpayers appeal on whether an LLP was ‘carrying on a business’
The First-tier Tribunal (FTT) has allowed the taxpayers’ appeal in the Limited Liability Partnership (LLP) decision GCH Corporation Ltd and others v HMRC. The case considers section 59A TCGA 1992 which allows for a UK LLP to be treated as a tax transparent entity for UK chargeable gains purposes but only if it “carries on a trade or business with a view to a profit”. HMRC considered that this condition was not satisfied in the taxpayers’ circumstances, with the result that the LLP should have been taxed as a non-transparent / opaque entity, affecting the tax treatment of assets contributed to the LLP by its members. Equivalent LLP tax transparency rules with similarly worded conditions can be found in section 1273 Corporation Tax Act 2010 and section 863 Income Tax (Trading and Other Income) Act 2005).
The FTT applied case law on the meaning of ‘carrying on a trade’ and ‘carrying on a business’ to the activities of the taxpayer LLP during the relevant period. Its activities, which involved making a return from a small number of investments and dealings in a small number of public company shares over a relatively short period of time, were found by the FTT to be insufficient to be a trade, after applying the standard ‘badges of trade’ analysis approach. 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 qualified to be treated as tax transparent for capital gains tax purposes.
The FTT considered that the LLP was established primarily for the purpose of implementing a tax scheme, relating to asset transfers between the LLP and its members, and how the tax transparency rules ceased to apply to the LLP in a subsequent liquidation. In Wednesday’s Budget, HMRC published details of a new measure, to take effect from 30 October 2024, to amend the section 59A treatment of assets contributed to an LLP by its members if the assets are subsequently returned during liquidation.
Supreme Court publishes permission to appeal decisions
The Supreme Court has published a summary of permission to appeal decisions made by the Court’s justices in October 2024:
· The Court has granted the taxpayer permission to appeal against the Court of Appeal’s May 2024 VAT judgment in Hotel La Tour Ltd. The case concerns the VAT recovery of costs incurred in a fundraising share sale.
· The Court has refused to grant permissions to appeal against three separate Court of Appeal judgments issued earlier this year, in favour of HMRC, on the application of the corporation tax ‘unallowable purpose’ loan relationship rule (section 441 CTA 2009): Kwik-Fit Group Ltd and others, BlackRock HoldCo 5 LLC, and JTI Acquisition Company (2011) Ltd.
· The Court has refused HMRC permission to appeal against the Court of Appeal’s May 2024 judicial review judgment in Beech Developments (Manchester) Limited concerning the scope of HMRC’s powers to issue certain determinations under the Construction Industry Scheme (CIS) regulations.
EMEA Dbriefs webcasts
On Tuesday 5 November 2024 at 12.00 GMT/13.00 CET there will be a further webcast from our Sustainability and Climate Dbriefs webcast series Sustainability reporting: defining the role of tax. Hosted by James Wright, our presenters will discuss recent developments in the sustainability reporting landscape, including the EU’s Corporate Sustainability Directive (CSRD) and, as businesses develop their responses to such legislative changes and wider stakeholder expectations, how tax could be reflected.