18 July 2025
Reminder: ‘L-Day’ on Monday
As a reminder, draft clauses intended for the next finance bill will be published for technical consultation on Monday 21 July 2025. The draft clauses, which will cover pre-announced policy changes, will be published on GOV.UK along with accompanying explanatory notes, tax information and impact notes, government responses to earlier consultations, and other supporting documents.
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.
First-tier Tribunal dismisses appeal relating to degrouping charge on goodwill
The First-tier Tribunal (FTT) has dismissed the taxpayer’s appeal in the capital gains degrouping charge case Currys Retail Limited v HMRC. Between 2004 and 2007, The Carphone Warehouse Limited (CPW) acquired the businesses of various companies within the Carphone Warehouse group, including £108 million of goodwill. In 2008, the CPW group decided to enter into a joint venture that would result in a capital gains tax degrouping, however by this time the value of the goodwill had declined to £51 million. A transaction was therefore entered into whereby CPW sold the goodwill and right to carry on the businesses to Best Buy UK CP Limited (BBUK), a then unrelated party, with the intended result that a liability to corporation tax on chargeable gains would only arise on the lower figure of £51 million, and no charge to corporation tax on chargeable gains would arise in the hands of CPW in respect of the goodwill when the degrouping occurred. However, HMRC disagreed and issued a partial closure notice (PCN) concluding that a degrouping charge under section 179(3) TCGA 1992 arose on £108 million of goodwill attached to the businesses upon formation of the joint venture, resulting in additional corporation tax of £30 million being due.
The FTT found that, on a realistic view of the facts, the businesses and goodwill remained with CPW following the transaction. The asset acquired by BBUK was neither the goodwill nor the businesses but rather the right to receive payments equal to a fixed percentage of the future gross revenues of the businesses. The charge described in the PCN was therefore correct.
EMEA Dbriefs webcasts
The EMEA Dbriefs programme is taking a break over the summer. Why not take this time to catch up on demand on some of our more recent webcasts that you may have missed. These include: Addressing the tax impacts of sustainability in the supply chain; Update on consultations on transfer pricing, permanent establishments and diverted profits tax; UK tax update - July; and Business leadership insights to deliver global talent agility. Please visit our Dbriefs website for more information, and to view any other recent webcasts on demand.