21 February 2025
Following the completion of its Committee stages last month, the government has scheduled the remaining Commons stages of Finance Bill 2024-25 (Report Stage and Third Reading) for Monday 3 March 2025. At the time of writing, no Report Stage amendments have been published.
On 17 February 2025, HM Treasury published a policy paper, Business rates: forward look, intended to give an overview of the expected timelines for reforms to the non-domestic rates system in England and government plans for stakeholders engagement. The paper summarises key announcements made at Autumn Budget 2024, including the intention to introduce, from 1 April 2026, two lower multipliers for Retail, Hospitality and Leisure properties with rateable values below £500,000, and a higher multiplier for all properties with rateable values of £500,000 and above. These reforms will take place alongside a routine revaluation, and the government will announce the multiplier rates and reliefs for 2026-27 at Budget 2025 in the autumn.
The paper also provides an update on the government’s Autumn Budget 2024 discussion paper Transforming business rates, that set out the government’s priority areas for further reform and invited industry to help co-design “a fairer business rates system that supports investment and is fit for the 21st century”. Stakeholder representations received so far will be considered when developing options for reform, and further stakeholder engagement will be targeted to develop specific reform options during Q2 and Q3 2025, ahead of announcements in Budget 2025.
Separately, the government this week provided an update on the implementation of Film Studio Business Rates Relief. The previously-announced 40% relief will be available for eligible studios in England until 2034, and, where applicable, will be backdated to 1 April 2024. The update notes that local authorities can now begin implementing the necessary local schemes to award the relief to studios.
EU finance ministers have confirmed the latest EU list of noncooperative jurisdictions for tax purposes (Annex I) and the ‘state-of-play’ document (Annex II). Jurisdictions are analysed by the European Council twice a year based on certain agreed criteria. Those that fail to meet the criteria are included in Annex I; whilst countries that have made acceptable commitments to modify their tax legislation are included in Annex II.
Compared to the previous version of October 2024, there are no changes to Annex I, which comprises: American Samoa, Anguilla, Fiji, Guam, Palau, Panama, Russia, Samoa, Trinidad & Tobago, the US Virgin Islands, and Vanuatu. Two jurisdictions, Costa Rica and Curaçao, have been removed from Annex II, and Brunei Darussalam has been added. The updated Annex II now comprises: Antigua & Barbuda, Belize, the British Virgin Islands, Brunei Darussalam, Eswatini, Seychelles, Türkiye, and Vietnam. See Deloitte Tax@Hand for further details.
Chelsea Cloisters Management Limited (CCML) is a management company for Chelsea Cloisters, a property of 656 apartments in London. The freehold owner is Realreed Limited, and the apartments are subject to long leases. CCML had not registered for VAT on the basis that it was supplying services to the leaseholders, and that its supplies were exempt under HMRC’s extra-statutory concession 3.18 (the ESC). Under the ESC, mandatory domestic service charges paid by both leaseholder and freeholder occupants of residential property are exempt from VAT. HMRC decided that CCML had been making standard-rated supplies of management services and registered CCML for VAT, on the basis that CCML was fulfilling its obligations to Realreed as the freehold owner, rather than making supplies to the leaseholders.
The First-tier Tribunal (FTT) has held that it did not have jurisdiction in respect of the substantive appeals, as it lacked jurisdiction to apply extra-statutory concessions. Nevertheless, the FTT went on to set out what it would have found if it had had jurisdiction, noting that its comments are obiter. The FTT considered that CCML made direct supplies of management services to the leaseholders, and that the service charges paid by the leaseholders to CCML were within the exemption provided by the ESC. Accordingly, the FTT would have held that HMRC’s decisions were unlawful. In its obiter comments, the FTT also concluded that CCML would have been entitled to rely on general principles of EU law, with the same outcome. (Contact: Ben Tennant)
On Tuesday 25 February 2025 at 12.00 GMT/13.00 CET, there will be a webcast from our international tax series titled Public country-by-country reporting – navigating the tax transparency landscape. Hosted by Alison Lobb, our panel will discuss the introduction of public country-by-country reporting (PCBCR) requirements by the EU and Australia, and what steps businesses can take to be ready to comply with these new regulations.