Tax update December 2018

In this month’s update we report on (1) the published response to the consultation on creating a “fund structure” within the Enterprise Investment Scheme for investment in innovative knowledge-intensive companies; (2) the published response to the consultation on extending the IR35 rules to the private sector; and (3) the published response to HMRC’s tax abuse and insolvency discussion document. We also comment on three recent decisions relating to (1) penalties attaching to employment intermediaries returns (2); penalties for failing to file tax returns; and (3) CGT holdover relief where the transferor was a foreign controller of the transferee.

News items

Enterprise Investment Scheme knowledge-intensive fund consultation

On 30 October 2018, the Treasury published the response to its consultation on creating a “fund structure” within the Enterprise Investment Scheme for investment in innovative knowledge-intensive companies.

Off-payroll working in the private sector

On 30 October 2018, a joint Treasury and HMRC publication was published summarising the responses to the consultation on the best way to tackle non-compliance with the off-payroll
working rules (IR35) in the private sector.

Tax abuse and insolvency discussion document

On 7 November 2018, HMRC published a summary of responses to the tax abuse and insolvency discussion document it released earlier this year.

Case reports

Thornton – identifiable HMRC offcer must determine penalties
In Robert, Adam and Dorothy Thornton (trading as A* Education) v HMRC [2018] UKFTT 568 (TC), the First-tier Tribunal (FTT) has held that penalties for failure to file employment intermediaries returns (EIRs) were invalidly issued as they had not been made by an identifiable offcer of HMRC under section 100, Taxes Management Act 1970 (TMA). 

Griffths – appeal against HMRC penalties allowed as notice to file was invalid
In Griffths v HMRC [2018] UKFTT 0527 (TC), the FTT has allowed the taxpayer’s appeal against penalties imposed by HMRC as its notice to file a tax return was invalidly issued and in any event the taxpayer had a reasonable excuse for failing to submit his return. 

Reeves – CGT holdover relief available where transferor is foreign controller of transferee
In Reeves v HMRC [2018] UKUT 293 (TCC), the Upper Tribunal (UT) has held that a non-resident taxpayer was entitled to holdover relief from capital gains tax (CGT) on a disposal he had made when he gifted his interest in a limited liability partnership to a UK-resident company of which he was the sole shareholder.

To find out more, download the full update below.