31 January 2025
The Public Bill Committee’s consideration of Finance Bill 2024-25 commenced, and concluded, this week. Each of the 66 government amendments and new clauses tabled in December and January (see previous Business Tax Briefings here and here) were approved by the Committee across four sittings in the mornings and afternoons of 28 and 30 January 2025. No amendments or new clauses tabled by opposition MPs on the Committee were passed.
The amended Finance Bill will now return to the House of Commons for its remaining Commons stages (Report Stage and Third Reading). No dates for these stages have been announced yet.
HMRC have published the latest annual update in their series transfer pricing and diverted profits tax statistics, covering the twelve months to 31 March 2024. The transfer pricing yield – which includes additional tax revenue from transfer pricing enquiries, Advance Pricing Agreements (APAs), Advance Thin Capitalisation Agreements (ATCAs), and transfer pricing Mutual Agreement Procedure (MAP) cases – was £1.79 billion in 2023-24. 128 transfer pricing enquiry cases, including real-time interventions, were settled in 2023-24 and the average age of a settled enquiry was 33.1 months.
The net amount received in respect of diverted profits tax (DPT) notices was £108 million in 2023-24, with an estimated £117 million of additional tax (primarily corporation tax) arising from transfer pricing-settled investigations into diverted profits. HMRC state that they are currently carrying out around 74 reviews into multinationals in relation to potentially diverted profits, including those which have registered under HMRC’s Profit Diversion Compliance Facility (PDCF). As at the end of March 2024, the stated total amount of tax under consideration in these cases was £4.5 billion. 19 cases were resolved under the PDCF in 2023-24.
On 28 January 2025, HMRC published supplementary draft manual guidance on multinational top-up tax and domestic top-up tax, the UK’s implementation of the OECD Inclusive Framework’s Pillar Two global minimum tax rules. The draft guidance follows earlier releases of draft guidance issued in June 2023, December 2023, and September 2024. HMRC are inviting feedback on the draft guidance, as well as any previously released draft guidance, by 8 April 2025. HMRC note that this will be the final release of draft guidance before the publication of their Pillar Two guidance manual “in late spring”.
The Corporate Criminal Offences (CCO) for the failure to prevent the facilitation of tax evasion were introduced by the Criminal Finances Act 2017. HMRC have this week updated their statistics on compliance activities in relation to CCO investigations. As at 31 December 2024, HMRC had 11 live CCO investigations, with no charging decisions yet made, and a further 28 identified cases were under review as to whether they should proceed to an investigation. The cases identified span 10 business sectors, including software providers, labour provision and transport. To date, HMRC have reviewed and rejected an additional 114 cases, however HMRC note that some of these previous investigations have led to satisfactory explanations that have caused CCO investigations to be dropped but have instead led to other tax and regulatory offences being pursued.
In March 2024, HMRC launched a technical consultation, titled Improving the data HMRC collects from its customers, on proposed draft PAYE regulations which would require employers’ Real Time Information (RTI) returns to include more detailed information on employees’ working hours within each relevant pay period. An update in August 2024 subsequently stated that any such change would not occur before April 2026 at the earliest. HMRC have now published a consultation outcome, announcing that they will not be proceeding with the RTI changes. HMRC state that the government has “listened to businesses and acted on their feedback about the administrative burden the requirements in these regulations would bring.”
The consultation also included separate proposed draft income tax regulations that would, from April 2025, require additional information to be included in self-assessment tax returns in relation to commencement and cessation of business activities and certain matters relating to close companies. The consultation outcome confirms that this change will be proceeding. The required regulations, The Income Tax (Additional Information to be included in Returns) Regulations 2025 (SI 2025/84), were made on 27 January 2025. HMRC’s explanatory note to the regulations is here.
The Deposit Scheme for Drinks Containers (England and Northern Ireland) Regulations 2025 (SI 2025/67), which establish a Deposit Return Scheme (DRS) for drinks containers in England and Northern Ireland, have been made. Under the DRS, a person supplied with a drink in an in-scope container will pay a deposit to the supplier of the container, and a person returning the container to a designated return point will be entitled to redeem that deposit. The DRS will commence on 1 October 2027. The regulations set out: the scope of the DRS; retailer, drinks producer and supplier roles; the functions of the deposit management organisation (the administrator who will operate the scheme); and monitoring, compliance and enforcement measures. The regulations’ explanatory memorandum states that further legislation will be made to implement the DRS, including the VAT treatment of deposits. In a policy paper issued in April 2024, the UK government; the Department of Agriculture, Environment and Rural Affairs in Northern Ireland; the Scottish Government; and the Welsh Government stated that, whilst there will be three legally distinct DRSs in the UK (in England and Northern Ireland, Wales, and Scotland), the schemes will be aligned, and will be “as interoperable and as simple as possible”. In Scotland, the legal framework for a DRS is in place, and further amending legislation will be made to bring the Scottish scheme into effect.
On Wednesday 12 February 2025 at 12.00 GMT/13.00 CET, there will be a webcast from our international tax series titled Cost-out: the role tax and legal can play in optimising supply chains. Hosted by Gareth Pritchard, our panel will discuss how businesses’ tax and legal departments can help with the adoption of agile, adaptable and resilient supply chain strategies; themes and trends in this area in the evolving global landscape; and practical insights and examples.