Tax update - February 2019

In this month’s update we report on (1) an Economic Affairs Committee report on treating taxpayers fairly; (2) HMRC’s extension of the deadline for responses to its consultation on the taxation of trusts; and (3) the Law Society’s practice note on the offence of failure to prevent the criminal facilitation of tax evasion. We also comment on three recent decisions relating to (1) the principles governing disclosure in the context of tax appeals;(2) business property relief under the Inheritance Tax Act 1984; and (3) the closure of an HMRC enquiry which was “drifting aimlessly”.

News items

Report of House of Lords Economic Affairs Committee – The Powers of HMRC: Treating Taxpayers Fairly
On 4 December 2018, the House of Lords Economic Affairs Committee published a report in which it concludes that recent powers provided to HMRC, including the use of accelerated payment notices (APNs), undermine the rule of law and are driving people towards bankruptcy by unfairly targeting freelance workers. Read more.

HMRC extends its deadline for responses to its consultation on the taxation of trusts
On 7 November 2018, HMRC began a consultation into the taxation of trusts. The consultation was originally due to last 12 weeks but the consultation period has been extended to 28 February 2019. Read more.

Law Society publishes updated practice note on the Criminal Finances Act 2017
On 4 January 2019, the Law Society published an updated practice note that provides guidance to solicitors on the corporate offence of failure to prevent the criminal facilitation of criminal tax evasion, which came into force on 30 September 2017. Read more.

Case reports

Addo – Disclosure against HMRC in tax appeals
In Addo v HMRC [2018] UKFTT 530 (TC), the First-tier Tribunal (FTT) considered the principles governing disclosure in the context of appeals before the FTT. Read more.

The Estate of Maureen Vigne – Livery business qualified for BPR for IHT purposes
In HMRC v Personal Representatives of the Estate of Maureen M Vigne [2018] UKUT 357 (TCC), the UT, in dismissing HMRC’s appeal, has confirmed that a livery business attracted business property relief (BPR) under section 105, Inheritance Tax Act 1984 (IHTA), as the business did not consist of wholly or mainly in making or holding investments. Read more.

Patel – HMRC ordered to close enquiry which was "drifting aimlessly"
In Patel v HMRC [2018] UKFTT 0561 (TC), the FTT has directed HMRC to close its enquiry. Read more.