10 January 2025
OECD Inclusive Framework releases Pillar One Amount B factsheet and pricing tool
On 19 December 2024, the OECD/G20 Inclusive Framework on BEPS published a factsheet and a pricing automation tool on Amount B. Amount B is a new approach for transfer pricing baseline marketing and distribution activities that seeks to streamline and simplify the application of the arm’s length principle. All businesses, regardless of size, are potentially within the scope of Amount B if they carry out suitable distribution activities. Countries can choose to adopt Amount B from 1 January 2025. For further details please see our Alert.
Finance Bill – Committee Stages
Finance Bill 2024-25 began its Committee Stages last month. The Bill’s provisions on capital gains tax, oil and gas taxation, VAT on private school fees, and stamp duty land tax were considered by MPs sitting in a Committee of the Whole House in December and were approved by MPs unamended.
The Bill’s other clauses and schedules will be considered by MPs in a separate Public Bill Committee. The first sitting of the Committee is expected to take place on 28 January 2025. On 19 December 2024, the government tabled 14 amendments and one new clause for the Public Bill Committee stage:
· Government amendments ‘Gov 1’ to ‘Gov 14’ would make changes to Schedule 4 of the Finance Bill on the Pillar Two global minimum tax rules. HMRC have re-published their explanatory notes to Schedule 4 updated for the changes proposed.
· Government New Clause 1 would provide for an increase in the rate of vehicle excise duty applicable to haulage vehicles from April 2025. HMRC have published separate explanatory notes to the clause.
Spring Forecast date announced – 26 March 2025
On 16 December 2024, HM Treasury issued a press release, and the Chancellor issued a written ministerial statement, confirming that the Office for Budget Responsibility (OBR) has been commissioned to prepare its next economic and fiscal forecast for publication on Wednesday 26 March 2025. The Chancellor will respond to the forecast with a parliamentary statement on the same day.
Digital platform reporting – Registration open
With effect from 1 January 2024, the UK implemented the OECD’s model reporting rules for digital platform operators in the UK. The rules require in-scope UK digital platforms to collect information, and report to HMRC annually, on the income of sellers (in the UK and partner jurisdictions) using their platforms to provide personal services, sell tangible goods, and rent out immoveable property or transport. The first reporting of data is due by 31 January 2025. On 30 December 2024, HMRC opened the registration for digital platform reporting. HMRC also issued guidance on the registration process and guidance on managing digital platform reporting. (Contact: Kate Ramm)
UK-Ecuador double tax treaty now in force
The double taxation convention and protocol signed by the governments of the UK and Ecuador in August 2024 entered into force on 19 December 2024 following the completion of ratification procedures by both countries. This is the first comprehensive double tax treaty between the UK and Ecuador.
According to HMRC, and in accordance with the timings set out in Article 29 of the convention, the agreement took effect in the UK from 1 January 2025 for taxes withheld at source, and will take effect from 1 April 2025 for corporation tax purposes and from 6 April 2025 for income tax and capital gains tax purposes. The agreement took effect in Ecuador from 1 January 2025 for taxes on income.
HMRC launch research and development tax relief voluntary disclosure service
On 31 December 2024, HMRC published details of a new research and development-specific voluntary disclosure service. The new guidance page, Tell HMRC if you've claimed too much Research and Development (R&D) tax relief, sets out how the service can be used by certain companies that have overclaimed R&D tax relief in the past and are no longer in time to amend returns, to disclose the issue to HMRC voluntarily and repay anything owed. The disclosure facility uses an online form and requires a company to upload details and calculations of the R&D tax relief overclaimed, together with calculations of interest and penalties due. The disclosure must also include a company’s ‘letter of offer’ to form part of a contractual settlement with HMRC. Within 30 calendar days of submission of the disclosure, HMRC will either issue an acceptance, state that they cannot accept the offer, or will ask for further information.
Revenue and Customs Brief 3 (2024): VAT on cladding remediation work
HMRC have published Revenue and Customs Brief 3 (2024) on VAT on cladding remediation work, together with an accompanying Help with VAT treatment of remedial works — Guidelines for Compliance (GfC11). The Brief deals with the deduction of VAT incurred on cladding remediation work carried out on existing residential buildings. HMRC consider that remediation work undertaken after the completion of construction qualifies as ‘snagging’ if the work carried out is sufficiently linked to the initial construction. If the initial construction was subject to VAT at the reduced or zero rate, the snagging work will also be subject to the reduced or zero rate. Otherwise, remediation work will be subject to VAT at the standard rate. VAT incurred on snagging work will be recoverable, subject to the normal rules. If remedial works are not part of the original construction, the VAT incurred may still be potentially recovered, where there is a direct and immediate link to the general business activity. GfC11 provides more detail on the VAT treatment of remediation works, including HMRC’s policy on what constitutes snagging, and includes examples of how to apply HMRC’s rules on the VAT treatment of remediation work and the recoverability of input tax incurred. (Contact: Ben Tennant)
New HMRC Permanent Secretary appointed
The government has announced the appointment of John Paul (JP) Marks as the next Permanent Secretary and Chief Executive of HMRC. Mr Marks is currently the Permanent Secretary for the Scottish Government. He will replace Sir Jim Harra who will step down in April.
The next EMEA Dbriefs tax webcast is on Thursday 16 January 2025 at 12.00 GMT/13.00 CET. In UK Tax Update – January, hosted by Andrew Clarke, our panel will discuss topical tax developments of relevance to UK businesses in relation to corporate taxes, employment taxes and indirect taxes.