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Digital services tax


FORTHCOMING CHANGE relating to the future withdrawal of DST: Following the OECD-led discussions that resulted in political agreement on a two-pillar solution in October 2021, the UK struck a deal with the US, Austria, France, Spain and Italy to transition away from the UK DST to the new global tax system, with a new DST-credit system being used for transition. As part of the deal, the UK will keep the revenue raised from the UK DST until the Pillar One reforms become operational and, once Pillar One is in effect, businesses will be able use the difference between what they paid in DST from January 2022, and what they would have paid if Pillar One had been in effect instead, as credit against their future UK corporation tax bill. In return, the US, which views digital services taxes as discriminatory against US companies, agreed to withdraw proposed retaliatory tariffs on some US imports from the other five countries, and committed to not taking further trade action against those countries because of their digital services taxes until the interim period ends. This agreement has been extended by all six

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FTT considers meaning of interest and decides that an element of redress payments constituted interest (NHS Mid & South Essex ICB and others v HMRC)

Tax analysis: In NHS Mid & South Essex ICB and others, the First-tier Tax Tribunal (FTT) decided that an element of the NHS continuing healthcare (CHC) redress payments constituted interest for the purposes of section 874 of the Income Tax Act 2007 (ITA 2007) and, furthermore, that the interest constituted yearly interest or was treated as yearly interest under ITA 2007, s 874(5A) since the interest was payable to individuals in respect of compensation.

Tax weekly highlights—19 December 2024

This week's edition of Tax weekly highlights includes: (1) the House of Commons committee debating (but not amending) clauses of the Finance Bill 2025, (2) the NICs Bill passing the House of Commons stages without amendment, and (3) the Spring Forecast to be published on 26 March 2025.

FTT applies carried-forward losses anti-avoidance rule (Blackfriars v HMRC)

Tax analysis: In Blackfriars Hotel (UK) Holdings Ltd, the First-tier Tax Tribunal (FTT) held that the anti-avoidance ‘loss refresh’ provisions of Part 14B of the Corporation Tax Act 2010 (CTA 2010) applied to disallow relief for pre-April 2017 carried forward loan relationship deficits against profits arising from tax arrangements entered into by the company.

UT sets aside FTT decision on tax treatment of EBT arrangements (M R Currell Ltd v HMRC)

Tax analysis: In M R Currell Ltd v HMRC, the Upper Tribunal (UT) considered an appeal of the taxpayer company against a decision of the First-tier Tax Tribunal (FTT) that a director and shareholder of the taxpayer company received taxable earnings in circumstances where the company had made a contribution to an employee benefit trust (EBT) which then subsequently loaned an equivalent amount to the shareholder director. The UT set aside the decision of the FTT and re-made it, allowing the taxpayer company’s appeal.

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