View the related Tax Guidance about Multiple dwellings relief
Weekly case highlights ― 13 November 2023
Weekly case highlights ― 13 November 2023These are our brief notes and thoughts on cases published in the last week or so which caught our eye and are likely to be of particular interest to tax practitioners. Full case reports and commentary on most of these cases will be included within our normal reference sources in the coming weeks.Business taxSkatteforvaltningen v Solo Capital Partners LLP and othersThe Danish tax authority believes that it has been the victim of a massive fraud across many countries, including the UK. Put briefly, the alleged fraud is that the authority was induced to make withholding tax repayments on dividends in circumstances where the claimant had no right to repayment. The total sum involved approaches £1.5bn. The authority seeks to sue the recipients in the UK courts (and other jurisdictions) for recovery of what it regards as fraudulent repayments.Before the substantive issue of whether there was fraud can be tried, there is the important question of whether or not the Danish authority can use the UK courts for this purpose. There is a long-standing principle of international law that the courts in one country will not enforce the tax laws of another country. It was argued by the defendants that this principle applied in this case and hence the tax authority had no right to conduct the proceedings. Their view was supported in the High Court, but the Court of Appeal upheld the authority’s appeal. That judgment has now been supported in the Supreme
Weekly tax highlights ― 15 April 2024
Weekly tax highlights ― 15 April 2024Direct taxesPAYE and NICs guides updatedHMRC has updated the 2024–25 version of its CWG2 employer guide to PAYE and NICs to note the following:•tax-free lump sums over £30,000 paid to employees who cannot work due to disability, injury or ill health no longer need to be reported to HMRC (also reflected in the 2023–24 edition)•the new rules around delayed reporting of salary advances•NICs rates from 6 April 2024HMRC has also published the 2024–25 edition of its guide CA44: National Insurance for company directors.New guidance on pension lump-sum allowancesHMRC has published the following new guidance which explains in straightforward terms how the individual lump sum allowance and lump sum death benefit allowance work from 6 April 2024, following abolition of the lifetime allowance:•find out the rules around Individual lump sum allowances•how to tell HMRC about a lump sum death benefit chargeHMRC has also updated its guidance ‘Protect your pension lifetime allowance’ to reflect the deadlines for applying for fixed protection 2016
Non-resident SDLT surcharge for residential property
Non-resident SDLT surcharge for residential propertyA 2% SDLT surcharge applies to land transactions of residential property in England and Northern Ireland by non-residents. The rates apply to purchases of freehold and leasehold property and to SDLT payable in respect of rents on the grant of a new lease (though only where the term of the lease is over seven years).The surcharge applies in addition to various other rates, including the residential higher rates (sometimes referred to as the ‘additional dwelling supplement’) and the flat 15% rate for non-natural persons.The existing residence rules for other taxes do not apply for SDLT. Instead, separate residence tests apply for SDLT, as discussed below. It is important to look at the detail of the test, as sometimes the outcome is counter intuitive. For example, a UK resident close company is considered non-resident for SDLT if it is controlled by one or more non-residents.It is important to remember that if the transaction is eligible for an SDLT relief that reduces or exempts a charge to SDLT, this also applies to the non-resident surcharge. For a list of SDLT reliefs, see the Stamp duty land tax ― basic rules for companies guidance note.The increased rates for non-resident transactions apply to land transactions with an effective date of 1 April 2021 onwards.HMRC has published full guidance on the non-resident surcharge on the GOV.UK website and in SDLTM09850.SDLT rates to which the non-resident surcharge appliesThe increased rates for non-resident transactions are 2% more than the effective rate
SDLT on property disposals by individuals
SDLT on property disposals by individualsStamp duty land tax (SDLT) is generally payable on the purchase or transfer of property or land in the UK where the amount paid is above a certain threshold. If the consideration is over £40,000, the transaction must be notified to HMRC on an SDLT return, even though no SDLT may be due. When it was originally introduced, SDLT applied to all UK land transactions. Devolution has resulted in Scotland and Wales introducing their own regimes.From 1 April 2015, land and buildings transaction tax (LBTT) applies to land transactions in Scotland. For details of LBTT, see Sergeant and Sims on Stamp Taxes AA12–AA22 (SSSD, AA[AA351]–SSSD, AA[AA862]). See also the guidance on the Revenue Scotland website. From 1 April 2018, land transaction tax (LTT) applies to land transactions in Wales. For details of LTT, see Sergeant and Sims on Stamp Taxes AA23–AA34 (SSSD, AA[AA901]–SSSD, AA[AA2115]). See also the guidance on the Welsh Revenue Authority website. Whilst the underlying rules applying to LBTT, LTT and SDLT are broadly similar in nature, the taxes are not identical. The rest of this guidance note covers the law which applies to transactions in England and Northern Ireland.Since SDLT is normally paid by the purchaser in the transaction, there are only limited points for the vendor to consider. SDLT is discussed further in the SDLT on property acquisitions by individuals guidance note.Linked transactions and multiple dwellings reliefA request by the purchaser for the vendor to split the disposal into a
Weekly case highlights ― 19 February 2024
Weekly case highlights ― 19 February 2024These are our brief notes and thoughts on cases published in the last week or so which caught our eye and are likely to be of particular interest to tax practitioners. Full case reports and commentary on most of these cases will be included within our normal reference sources in the coming weeks.Employment taxShivani Mathur v HMRCThe Upper Tribunal has dismissed the taxpayer’s appeal relating to the termination of employment provision in ITEPA 2003, s 401 confirming, once again, its wide scope. The taxpayer received a payment of £6m from her former employer in settlement of employment tribunal proceedings but argued that it arose from negotiations based on the discrimination and victimisation she had experienced during her employment, rather than as a result of the termination. As often with Upper Tribunal decisions, there is little here that wasn’t in the original FTT decision holding that s 401 applied. The UT upheld the decision because there were no errors in law and there was sufficient evidence to support the FTT’s finding that the termination was central to the claims of discrimination in the employment tribunal proceedings. Capital gains taxArshad Mahmood v HMRCNo doubt there are many taxpayers who wish that they could turn back time and undo a transaction when they discover the unpleasant tax consequences. That was what the taxpayer attempted here, relying on the common law doctrine of ‘common mistake’ under which a transaction may be void if the parties enter into
Tolley tax case tracker
Tolley tax case trackerThis tax tracker tool displays the current status and most recent developments of direct tax cases being heard by the Upper Tribunal (UT), the Court of Appeal, the Court of Session, the Supreme Court and the EU Court of Justice as at 14 May 2024. It is updated on a rolling monthly basis.The tracker is split into three parts:•Cases subject to an appeal•Cases potentially subject to an appeal, and•Finalised tax casesRecent updates are shown below in bold.Cases subject to an appealThis section of the tracker shows those cases that are currently subject to an appeal.Name of parties and citationCurrent statusAltrad Services LFtd (formerly Cape Industrial Services Ltd) and another v HMRCCA/2022/001869; [2023] EWCA Civ 474; [2022] UKUT 185 (TCC); [2020] UKFTT 162 (TC)Corporate tax: Ramsay principle The FTT found that the scheme failed on Ramsay grounds because the taxpayers had not really disposed of (and then reacquired) the assets on which allowances were claimed. However, FTT found that, but for Ramsay, the scheme would have worked. The UT decided that the taxpayers were entitled to capital allowances even though these had been created by an artificial series of transactions with no business purpose, reversing the FTT’s decision that the arrangements were defeated by a Ramsay analysis. The Court of Appeal granted HMRC permission to appeal the UT’s decision on its first ground of appeal, namely that the UT erred in law in concluding that the taxpayers
SDLT on property acquisitions by individuals
SDLT on property acquisitions by individualsIntroductionStamp duty land tax (SDLT) was introduced for land transactions with effect from 1 December 2003. Whereas stamp duty was a tax on documents, SDLT is a tax based on the acquisition of a chargeable interest, whether or not evidenced in writing. When it was originally introduced, SDLT applied to all UK land transactions. Devolution has resulted in Scotland and Wales introducing their own regimes.From 1 April 2015, land and buildings transaction tax (LBTT) applies to land transactions in Scotland. For details of LBTT, see Sergeant and Sims on Stamp Taxes AA12–AA22 (SSSD, AA[AA351]–SSSD, AA[AA862]). See also the guidance on the Revenue Scotland website. From 1 April 2018, land transaction tax (LTT) applies to land transactions in Wales. For details of LTT, see Sergeant and Sims on Stamp Taxes AA23–AA34 (SSSD, AA[AA901]–SSSD, AA[AA2115]). See also the guidance on the Welsh Revenue Authority website. Whilst the underlying rules applying to LBTT, LTT and SDLT are broadly similar in nature, the taxes are not identical. The rest of this guidance note covers the law which applies to transactions in England and Northern Ireland only.This guidance note focuses on the rules for transactions where the purchaser is an individual. For details of the SDLT rates that apply to these transactions, see the SDLT on property acquisitions by individuals ― tax rates guidance note.For the rules that apply to companies, see the Stamp duty land tax ― basic rules for companies guidance note.Recent SDLT changes relevant to individualsAs
Spring Budget 2024
Spring Budget 2024Chancellor Jeremy Hunt delivered his Spring Budget on 6 March 2024, setting out further proposals to stimulate growth in the economy in advance of a General Election.The key changes / announcements made are summarised below. Detailed analysis will follow in all of our usual sources.Personal taxesAbolition of the remittance basis of taxationUK resident individuals who are not domiciled or deemed domiciled in the UK currently have the choice to pay tax on the remittance basis (meaning UK tax is only paid on foreign income and gains to the extent that these are brought to the UK in the tax year) or the arising basis (meaning UK tax is payable on worldwide income and gains arising in the tax year).From 6 April 2025, the remittance basis of taxation is expected to be abolished. This is to be replaced by a new regime linked to the number of years of UK residency.Individuals will not be taxed in the UK on their foreign income and gains for the first four tax years of UK residency, under a new system called the ‘foreign income and gains’ regime (also known as FIG). They will be free to bring the foreign income and gains arising in those tax years to the UK without suffering a UK tax liability, in a departure from the existing remittance basis rules. They will also not pay tax on non-resident trust distributions. They will not however be entitled to a UK personal allowance or annual exempt amount. From
Weekly case highlights ― 12 February 2024
Weekly case highlights ― 12 February 2024These are our brief notes and thoughts on cases published in the last week or so which caught our eye and are likely to be of particular interest to tax practitioners. Full case reports and commentary on most of these cases will be included within our normal reference sources in the coming weeks.Business taxBAT Industries plc and others v Commissioners of Inland Revenue and anotherLitigation under the Franked Investment Income (FII) Group Litigation Order, which concerns the pre-April 1999 regime for overseas dividends, has now been ongoing for more than 20 years. The technical issue, whether the regime contravened EU law, was settled a number of years ago and is, anyway, no longer relevant to anyone other than companies whose claims are yet to be resolved. This case follows the Supreme Court’s decision in 2020 on whether the claims were out of time under Limitation Act 1980, s 32. This requires claims arising from a mistake of law to be made within six years of the time when the claimant discovered, or could with reasonable diligence have discovered, the mistake. Although the Supreme Court set out the principles to be applied, it considered that it did not have the evidence needed to determine when the six-year period actually began. This decision is concerned solely with that issue. The court decided that the clock started running on 6 June 2000, the date of the EU court decision in Verkooijen, which concerned the Dutch system
Stamp duty land tax ― basic rules for companies
Stamp duty land tax ― basic rules for companiesIntroductionStamp duty land tax (SDLT) is generally payable on the purchase or transfer of interests in land and buildings in England and Northern Ireland where the amount paid is above a certain threshold. In addition, most of these transactions must be notified to HMRC on an SDLT return (also known as a land transaction return), even if no tax is due. See the SDLT ― administration guidance note for further commentary on notifiable transactions.From 1 April 2015, land and buildings transaction tax (LBTT) applies to land transactions in Scotland. For details of LBTT, see Sergeant and Sims on Stamp Taxes AA12–AA22 (SSSD, AA[AA351]–SSSD, AA[AA851]). See also the guidance on the Revenue Scotland website. From 1 April 2018, land transaction tax (LTT) applies to land transactions in Wales. For details of LTT, see Sergeant and Sims on Stamp Taxes AA23–AA34 (SSSD, AA[AA901] – SSSD, AA[AA2101]. See also the guidance on the Welsh Revenue Authority website. Whilst the underlying rules applying to LBTT, LTT and SDLT are broadly similar in nature, the taxes are not identical. The rest of this guidance note covers the law that applies to transactions in England and Northern Ireland only. This guidance note focuses on the rules for transactions where the purchaser is a company. For details of the SDLT rates that apply to these transactions, see the Stamp duty land tax ― basic rules for companies ― tax rates guidance note.For the rules that apply to individuals,
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