Tax update - February 2020

In this month’s update we report on (1) HMRC’s Venture Capital Schemes Manual; (2) the review into the off-payroll working rules; and (3) a briefing paper regarding retrospective taxation put before the House of Commons. We also comment on three recent cases relating to (1) the meaning of “structure” for the purposes of capital allowances; (2) an HMRC challenge to carry-back loss relief claims; and (3) principal private residence relief.

News items

HMRC updates its Venture Capital Schemes Manual

On 27 November 2019, HMRC amended its Venture Capital Schemes Manual pages (VCT qualifying holdings: financial health requirement (VCM55050) and SEIS: income tax relief: issuing company: financial health requirement (VCM34060)), updating its guidance on the financial health requirement for Venture Capital Trusts and the Seed Enterprise Investment Scheme, set out in sections 286B (VCT) and 257DE (SEIS), Income Tax Act 2007 (ITA 2007), to bring it in line with EU guidelines. Read more

Review of off-payroll working rules launched

On 7 January 2020, the government launched a review of changes to the off-payroll working rules, known as IR35, which aims to address increasingly vocal concerns regarding how they will be implemented. Read more

Retrospective taxation

On 23 January 2020, the House of Commons published a report into the circumstances in which retrospective legislation can and has been used to counter perceived tax avoidance. The paper addresses debates regarding the use of retrospective changes in tax law, particularly in relation to section 58, Finance Act 2008 and the 2019 Loan Charge. Read more

Case reports

SSE Generation – UT considers the meaning of structure for the purposes of capital allowances

In HMRC v SSE Generation Ltd [2019] UKUT 332 (TCC), the Upper Tribunal (UT) has dismissed HMRC’s appeal against the decision of the First-tier Tribunal (FTT) that the taxpayer was eligible for capital allowances in relation to certain expenditure it incurred in connection with the construction of the Glendoe Hydro Electric Power Scheme. Read more

Knibbs – HMRC’s challenge to carry-back loss relief claims was correct

In Knibbs and ors v HMRC and R (oao Astley and ors) v HMRC [2019] EWCA Civ 1719, the Court of Appeal has held that Schedule 1B, Taxes Management Act 1970 (TMA), can apply to a claim for carry-back loss relief. Read more

Higgins – for the purposes of PPR relief “period of ownership” starts on completion

In Desmond Higgins v HMRC [2019] EWCA Civ 1869, the Court of Appeal has held that the date of acquisition of an off-plan property for the purposes of principal private residence relief (PPR) was the date of completion and not the date of exchange of contracts. Read more