Tax Bites – December 2024

Welcome to the latest edition of RPC's Tax Bites – providing monthly bite-sized updates from the tax world.

News

HMRC publishes Guidance on applying for statutory clearance

HMRC has published Guidance on how to apply for statutory clearance for a transaction.

The Guidance provides information on checking the statutory provisions for an application; what to include in the application; how to send the application; and what to do if the application is market sensitive.

This is helpful for a range of statutory clearances for transactions including   Capital Gains Tax, statutory demergers, transactions relating to the Enterprise Investment Scheme, and Derivative contracts.

HMRC updates its Guidance on how to report and account for a loan charge liability

HMRC has updated its Guidance on how to report and account for a loan charge liability. The Guidance sets out how to report details of a disguised remuneration loan scheme and how to account for a loan charge liability.

The government announced at Autumn Budget 2024 that there will be a further independent review of the loan charge to "bring the matter to a close", and this Guidance may have to be updated once that review has been completed. In the meantime, HMRC has confirmed that the current loan charge legislation remains in force and so any agreed payment plans should continue to be adhered to.

HMRC publishes Guidance on making R&D tax relief claims

HMRC has published Guidance on how to claim Corporation Tax relief on Research and Development (R&D) projects.

The Guidance provides a step-by-step guide for completing your company tax return to claim R&D relief. It also explains how tax or accountancy professionals can report a "breach in standards" relating to R&D claims to HMRC.

HMRC updates its International Manual on transfer of assets abroad

HMRC has updated its International Manual on the transfer of assets abroad legislation in light of the Supreme Court's decision in HMRC v Fisher [2023] UKSC 44 (see INTM600825, INTM600830, INTM600835,  INTM600845, INTM600800, INTM600820 and INTM602480).

Following the Supreme Court's decision in Fisher, new legislation was introduced to reverse part of that decision and extend the transfer of assets abroad rules to ensure that a transfer made by a close company, in which an individual is an owner, is treated as a relevant transfer.

Case reports

Tribunal finds that mixed-use SDLT rates applied to the  purchase of a property and paddock

In HMRC v Suterwalla and another [2024] 188 (TCC), the Upper Tribunal (UT) confirmed that mixed-use stamp duty land tax (SDLT) rates applied to the purchase of a property and adjoining paddock.

The UT's reasoning is helpful in clarifying when a property may be considered mixed-use and so subject to the lower rate of SDLT. Although the nature of the property at the time of completion is relevant when determining whether the mixed use SDLT rates apply, the UT did note that there may be circumstances where a transaction that takes place after completion will evidence the nature of the property at completion.

You can read our commentary on the decision here.

Tribunal finds insufficiency in taxpayer's return was not brought about "deliberately"

In Yip v HMRC [2024] UKFTT 00434 (TC), the First-tier Tribunal (FTT) allowed the taxpayer's appeal finding that an insufficiency in his self-assessment return was not brought about deliberately.

As well as a reminder of the test that HMRC must satisfy in order to issue a valid discovery assessment under section 29, Taxes Management Act 1970, this decision provides some helpful guidance on the approach taken by the FTT to hearsay evidence.

Given the length of time that HMRC enquiries and investigations often take, the unavailability of witnesses and gaps in the evidential record are risks that are frequently faced by taxpayers seeking to challenge HMRC decisions. While ultimately those issues did not prove fatal to the taxpayer's appeal in the circumstances of this particular case, the decision does highlight the importance of taxpayers considering how their witness evidence might be received in circumstances where the witness is unable to attend the hearing to provide their testimony and the proactive steps that should be taken in the preparation of witness evidence to mitigate any associated risks.

You can read our commentary on the decision here.

Tribunal allows taxpayer's appeal against information notice

In Sangha v HMRC [2024] UKFTT 00564 (TC), the FTT considered an appeal against an information notice issued under paragraph 1, Schedule 36, Finance Act 2008 and set aside or varied all of the items requested by HMRC, as they were not 'reasonably required' or in the taxpayer's 'possession or power'.

This decision provides a helpful indication of the analysis that the FTT is likely to adopt when examining the appropriateness of information requested by HMRC in a formal information notice.

The decision also highlights the importance of carefully considering the information requested by HMRC to ensure that it is entitled to request the information and, in particular, whether the information which has been requested is 'reasonably required' in order to check the taxpayer's position. 

You can read our commentary on the decision here.

And finally...

RPC have recently published its Contentious Tax Quarterly Review, which is based on an article that was first published in Tax Journal. The review considers: (1) fiscal drag and recent decisions in respect of inheritance tax; and (2) a recent decision on Stamp Duty Land Tax. 

The Review can be read here.