8 November 2024
The text of Finance Bill 2024-25 was published on 7 November 2024, together with its Explanatory Notes. The Bill’s dedicated pages on Parliament’s website are here.
The Bill had its First Reading in the House of Commons on 6 November 2024 following the conclusion of MPs’ four-day debate on the Autumn Budget and their approval of the Budget’s Ways and Means Resolutions.
On 7 November 2024, the Bank of England’s Monetary Policy Committee announced a decrease in the official Bank Rate by 0.25 percentage points from 5% to 4.75%. HMRC have issued a press release setting out the automatic 0.25 point decrease to interest rates for late tax payments and tax repayments as a result. The new rates take effect from 18 November 2024 for quarterly instalment payments of corporation tax, and from 26 November 2024 for most other tax payments. HMRC will shortly update their interest rate tables accordingly.
The latest HMRC rates are unaffected by the government’s Autumn Budget announcement of planned changes, due to take effect from 6 April 2025, to increase the late payment interest rate charged by HMRC on unpaid tax liabilities by 1.5 percentage points
The First-tier Tribunal has dismissed a taxpayer’s appeal in the corporation tax case Syngenta Holdings Limited v HMRC concerning the loan relationships unallowable purpose rule (sections 441 and 442 Corporation Tax Act 2009). The taxpayer, a UK-resident group company, claimed tax deductions between 2011 and 2016 for interest expense arising on a new intra-group loan from an overseas group treasury company. The loan had partly-funded an intra-group acquisition in 2011 under which the taxpayer acquired 100% of the shares in another UK company from its non-UK parent company. HMRC considered that the main purpose the taxpayer was a party to the loan for was an unallowable purpose – i.e. the obtaining of the UK tax deductions for the interest. After reviewing the evidence in detail, including documentary evidence from the time the transaction was implemented, and applying recent case law on the unallowable purpose rule, the First-tier Tribunal made a finding of fact that the only reason the loan was entered into was to secure the tax advantage. Accordingly, the Tribunal agreed with HMRC that all the interest debits were disallowed under the rule.
On 31 October 2024, HM Treasury made the Platform Operators (Due Diligence and Reporting Requirements) (Amendment) Regulations 2024 (SI 2024/1082). These regulations make two technical amendments to primary regulations from 2023 (SI 2023/817) for the implementation of the OECD’s model reporting rules for digital platforms in the UK. The UK’s platform reporting rules require in-scope UK digital platforms to collect information, and report to HMRC annually, on the income of sellers using their platforms to provide personal services, sell tangible goods, and rent out immoveable property or transport, with effect from 1 January 2024 (with the first reporting of data in January 2025).
The original regulations allow for a reporting platform operator to be exempt from reporting information to HMRC about sellers (including UK tax resident sellers) if another platform operator would report the same information to a tax authority in an overseas partner jurisdiction, and the overseas tax authority would subsequently exchange the information with HMRC. The new instrument amends this rule to ensure that, where there is a UK platform operator, information about sellers who are resident in the UK must be reported to HMRC directly. The new instrument also removes a requirement for platform operators to apply a proportional reduction to certain seller exclusion thresholds, as the Treasury states that this requirement would have had the unintended effect of bringing into scope sellers that would not otherwise be reportable and would have created unnecessary additional burdens on platform operators. HMRC have published a corresponding tax information and impact note on the effects of the amendments.
On 5 November 2024, the EU’s Economic and Financial Affairs Council (ECOFIN) reached agreement on the EU’s VAT in the Digital Age (ViDA) package. The ViDA package is intended to update the EU VAT system to take account of technological advances, address the challenges of the digital economy, and be more resilient against VAT fraud. The ViDA package includes three pillars. Firstly, digital reporting requirements, with new rules for digital reporting based on electronic invoicing. Secondly, a new VAT regime for platform economy operators in the short-term accommodation and passenger transport sectors, who will be responsible for collecting and remitting VAT (the ‘deemed supplier’ model). And thirdly, single VAT registration, to reduce the need for taxpayers to VAT register in each EU member state in which they do business.
The European Commission originally released the ViDA proposals in December 2022, and discussions between EU member states have been taking place since then. The most recent changes made to the package were to alleviate the administrative burden on small- and medium-sized businesses from the scope of the regime for platform economy operators, and to postpone the application date for the rules on the platform economy and single VAT registration. For more information on the package, including the key changes and timelines, see Deloitte tax@hand.
The next EMEA Dbriefs webcast is UK Tax Update – November on Tuesday 12 November 2024 at 12.00 GMT/13.00 CET. Hosted by Tim Waterhouse, our panel will discuss topical tax developments of relevance to UK businesses in relation to corporate taxes, employment taxes and indirect taxes
Then, on Wednesday 13 November 2024 at 12.00 GMT/13.00 CET, there will be a webcast from our sustainability and climate series on the Tax impact of the EU Deforestation-Free Regulation (EUDR) and the Carbon Border Adjustment Mechanism (CBAM). Hosted by Zoe Hawes, our speakers will discuss how businesses’ tax and trade teams can prepare for and comply with these two key recent EU regulations, that will: prohibit the import, export or trading of specified commodities and products on the EU market unless it can be demonstrated they are deforestation-free and produced in accordance with local laws (EUDR); and put a carbon price on the embedded emissions in certain carbon intensive goods that are imported into the EU (CBAM).