12 September 2025
Date of Autumn Budget confirmed
The Chancellor of the Exchequer, Rachel Reeves MP, has announced that the Autumn Budget will take place on Wednesday 26 November 2025. The Budget will be presented alongside the latest economic and fiscal forecasts commissioned from the Office for Budget Responsibility (OBR). HM Treasury is inviting Budget representations from interested stakeholders until 15 October 2025.
HMRC publish Guidelines for Compliance on checking documents filed with HMRC are correct and complete
HMRC have published the latest in their Guidelines for Compliance (GfC) series. GfCs are intended to help taxpayers and their advisers understand HMRC’s view on particular issues and include best practice examples. New GfC13, Help ensuring documents filed with HMRC are correct and complete sets out HMRC’s view on the meaning of ‘correct and complete’. HMRC state that their policy has not changed and that they expect most taxpayers with simple tax affairs will be unaffected. GfC13 applies to all HMRC submissions that include a declaration that they are correct and complete, including, but not limited to, self-assessment returns for income tax, corporation tax, and VAT.
One-to-many campaign – marginal relief
HMRC have launched a ‘one-to-many’ letter campaign, aimed at companies that may have miscalculated corporation tax marginal relief in their submitted company tax returns. Marginal relief, re-introduced with effect from 1 April 2023, generally applies to reduce the corporation tax liability of companies with taxable profits between lower and upper limits of £50,000 and £250,000 respectively. The relevant legislation, however, requires these limits to be reduced proportionately whenever a company has one or more ‘associated companies’ in an accounting period. HMRC’s letters state that they “have information that shows your company has associated companies, but hasn’t declared them when claiming Marginal Relief on a Company Tax Return”. HMRC request that recipients review their relevant returns and respond within 30 days. Letters are planned to be issued between July and October 2025.
HMRC publish Pillar Two guidance manual
HMRC have published their Pillar Two guidance manual containing technical guidance setting out HMRC’s views on the operation of 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 publication follows four earlier public consultations on draft manual guidance released between June 2023 and January 2025. The introduction to the manual notes that HMRC are finalising further pages on a range of specific Pillar Two topics with the intention that these will be released “shortly”. HMRC continue to invite any feedback on an ongoing basis and will continue to update the manual in response to comments received and any new relevant legislation.
Lists of countries with qualified status for Pillar Two purposes updated
The OECD Inclusive Framework has updated its central record of Pillar Two legislation with transitional qualified status. The central record lists jurisdictions whose local implementation of the Pillar Two global minimum tax rules has so far been assessed as ‘qualified’ in accordance with the Inclusive Framework’s simplified transitional qualification mechanism. See our Alert from January for further details. Additions to the list of jurisdictions with a qualified domestic minimum top-up tax that meets safe harbour standards include Brazil, Gibraltar, the Isle of Man, Japan and Singapore. Additions to the list of jurisdictions with a qualified income inclusion rule include Gibraltar, the Isle of Man, Jersey (which is not introducing a qualified domestic minimum top-up tax), Singapore and Switzerland.
Advisory fuel rates including new rate for public charging of electric cars
HMRC have published the new advisory fuel rates for company cars applicable from 1 September 2025. The previous mileage rates, effective from 1 June 2025, can be used for up to one month from the date the new rates apply. The rates for diesel engines sized 1600cc or less, and over 2000cc have increased by 1 pence per mile. The rates for diesel engines sized 1601cc to 2000cc, and all petrol and LPG engine sizes are unchanged from the previous quarter. On 1 September 2025, two separate rates for fully electric cars were introduced, depending on charging location. The rate for home charging is 8 pence per mile and the rate for public charging is 14 pence per mile (the initially published public charging rate was subsequently updated on 26 August).
Prudential Assurance Company Ltd: VAT groups and continuous supplies
In November 2007, Silverfleet Capital Ltd completed a management buy-out and left the Prudential VAT group. Since 2002 it had been providing fund management services to one of Prudential’s with-profits funds, and was entitled to a performance-related fee in the event that the fund exceeded certain benchmarks. Those benchmarks were eventually met in 2014 and 2015, triggering performance payments of £9.3m. Given that Silverfleet carried out its fund management services before it left the VAT group, but received payment several years afterwards, should it charge VAT? Silverfleet’s management qualified as a continuous supply of services, and HMRC therefore considered that VAT had to be charged by reference to when the performance fee was invoiced and paid.
The Supreme Court has found in favour of HMRC that VAT should be chargeable. The Supreme Court found that the purpose of the VAT grouping provisions is to promote organisational fiscal neutrality between corporate groups, but that it must be read alongside the time of supply rules. In this case, Regulation 90 of the 1995 VAT Regulations provides that continuous supplies of services are treated as separately and successively supplied at the earlier of each time payment is made or a VAT invoice is issued, and the UK law does not go further than is permitted by the relevant provisions of the EU Principal VAT Directive. This meant that there was a chargeable event when the invoice for the success fee was issued or paid, and that was when Prudential and Silverfleet were no longer in the same VAT group. There is no basis for inferring a separate rule for VAT groups that depends on when the services were actually performed.
Arcomet Towercranes SRL: VAT and transfer pricing adjustments
SC Arcomet Towercranes SRL (Arcomet Romania) acquired cranes for sale or lease to customers in Romania. Arcomet Romania’s parent company, Arcomet Service NV Belgium (Arcomet Belgium), provided commercial support to Arcomet Romania. A 2010 transfer pricing study set an operating margin for Arcomet Romania of between -0.71% and 2.74%, in accordance with the Transactional Net Margin Method. From 2011 to 2013, Arcomet Romania’s profits exceeded this amount, and Arcomet Belgium accordingly issued invoices to Arcomet Romania. Arcomet Romania applied the reverse charge to the first two invoices, but for the third invoice, considered that the transaction was outside the scope of VAT.
The Romanian tax authorities (RTA) took the view that all three invoices related to intra-EU purchases of services and so should have been subject to the reverse charge, and that Arcomet Romania had failed to produce sufficient evidence of the nature or necessity of the services to justify deduction of the reverse-charged VAT. The CJEU has held that, for VAT purposes, Arcomet Belgium’s activities constituted taxable supplies; there was a legal relationship with reciprocal performance, and a direct link between the services supplied and the amounts paid. The fact that the amounts were calculated by way of a transfer pricing methodology, and could vary, did not affect this analysis. The CJEU rejected the RTA’s arguments that Arcomet Romania had to demonstrate that the services were necessary or appropriate, but agreed that the RTA could require evidence, additional to the invoices, to support the substantive conditions for VAT deductibility, namely that the services were supplied to and were used by Arcomet Romania for the purposes of its taxable activities.
EMEA Dbriefs webcasts
We have five Dbriefs tax webcasts over the next month: Tax transformation trends 2025 (24 September 2025); Update on latest Pillar Two developments (25 September 2025); Navigating tax disputes with HMRC through to resolution (30 September 2025); Readiness for EUDR filing – 3 months to go (2 October 2025); and Unlocking the real benefits of AI (8 October 2025). Please visit our Dbriefs website for more information, and to view any other recent webcasts on demand.