Tax update August 2018

In this month’s update we report on the summary of responses to HMRC’s consultation on extending time limits for offshore non-compliance, HMRC’s policy paper on “profit-fragmentation” and HMRC’s consultation on proposals for new civil information gathering powers for HMRC.

We also comment on three recent decisions relating to (1) the appropriate forum in which to litigate; (2) the Supreme Court’s decision in “Project Blue”; and (3) whether a loan by a pension scheme was an unauthorised payment.

News items

HMRC publishes summary of responses to its consultation on extending time limits for offshore non-compliance

On 6 July 2018, HMRC published an updated version of the summary of responses to its consultation on the implementation of a new minimum tax assessment time limit of 12 years to make assessments or issue notices of determination in cases involving offshore income, gains or chargeable transfers. Read more.

HMRC publishes policy paper on “profit fragmentation”

On 10 July 2018, HMRC published a policy paper on “profit fragmentation”. The government intends to tackle tax avoidance schemes which move profits outside the charge of UK tax, often by using offshore trusts and companies, by introducing new rules which will add such profits to the profit of the UK trade. Read more.

HMRC publishes consultation on amending its civil information powers
On 10 July 2018, HMRC published a consultation paper on options for amendments to its civil information powers. Read more.

Case reports

Bell: The importance of selecting the correct forum when alleging unfairness on the part of HMRC

In Bell v HMRC [2018] UKFTT 261 (TC), the taxpayer’s appeal was struck out by the First-tier Tribunal (FTT), because that tribunal does not have jurisdiction to consider issues of public law. Read more.

Project Blue: Supreme Court allows HMRC’s appeal in SDLT sub-sale case

In Project Blue Limited v HMRC [2018] UKSC 30, the Supreme Court (by a majority) has found that section 75A, Finance Act 2003 (an anti-avoidance provision), was applicable resulting in stamp duty land tax (SDLT) being payable notwithstanding that sections 45 (sub-sale relief) and 71A (exemption for alternative property finance) Finance Act 2003, would have otherwise resulted in no SDLT being payable. Read more.

Bayonet Ventures: Loan by pension scheme was not an unauthorised payment

In Bayonet Ventures LLP & Anor v HMRC [2018] UKFTT 262 (TC), the First-tier Tribunal (FTT), has held that a loan made to a limited liability partnership (LLP) by a pension scheme in which one of the partners of the LLP was a member, was not an unauthorised payment (section 164, Finance Act 2004) and should not be treated as a loan to the partner (section 863, Income Tax (Trading and Other Income) Act 2005 (ITTOIA)) as section 863 only applies if the LLP is carrying on a “trade, profession or business with a view to profit”, which it was not. Read more.