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View the related Tax Guidance about Multiple dwellings relief

Weekly case highlights ― 28 October 2024

Weekly case highlights ― 28 October 2024These are our brief notes and thoughts on cases published in the last week or so which caught our eye and are likely to be of particular interest to tax practitioners. Full case reports and commentary on most of these cases will be included within our normal reference sources in the coming weeks.Business taxGCH v HMRCThis is an unusual case because it concerns an arrangement which was notified under DOTAS but which the tribunal has accepted was effective in avoiding a capital gains tax charge which would otherwise have arisen. It involved a group of shareholders selling shares in a public company in exchange for loan notes. Those loan notes were then contributed as capital to an LLP which was subsequently liquidated. The tax planning relied on the fact that the contribution of the loan notes by way of capital by the individuals would not trigger a capital gains charge provided that the LLP was trading or carrying on a business with a view to profit. However, the base cost of the loan notes would still be taken into account in computing tax liabilities at the point that the LLP was liquidated, with the effect that little or no tax would be paid on the funds received by the LLP members on liquidation. The end result was that the gain on the original share disposal simply disappeared.The case therefore hinged on the status of the LLP. The tribunal had little difficulty in determining

Weekly tax highlights ― 22 July 2024

Weekly tax highlights ― 22 July 2024Direct taxesHMRC form P1000 published onlineHMRC has published form P1000 online for the first time, it having previously only been available on request from HMRC. The form is used to advise HMRC of the personal representatives on a death and also to authorise someone to act for them, rather than completing a form 64-8. The form is not electronic and will need to be printed and completed in hardcopy.Property taxesLand transaction tax reliefs: consultation responses summarisedThe Welsh government’s report summarises the contributions received to its consultation on land transaction tax (LTT) reliefs. In response, the Welsh government intends to undertake further work, taking into account comments received, before making decisions on potential changes to LTT reliefs. The report sets out key issues considered, under the following main sections:•multiple dwellings relief ― abolition received a mixed response, with respondents on both sides raising various problems and challengessix dwellings rule ― most favoured retaining the rule, with concerns raised around potential negative impacts on larger investors, housing supply, and the Welsh economy if abolishedsocial housing ― respondents agreed with the extension of existing relief to Welsh local authorities for social housingInternationalHMRC brings together pillar 2 guidance HMRC has brought together its collection of guidance on the multinational top-up tax and domestic

Non-resident SDLT surcharge for residential property

Non-resident SDLT surcharge for residential propertyA 2% SDLT surcharge applies to land transactions of residential property in England and Northern Ireland by non-residents. The rates apply to purchases of freehold and leasehold property and to SDLT payable in respect of rents on the grant of a new lease (though only where the term of the lease is over seven years).The surcharge applies in addition to various other rates, including the residential higher rates (sometimes referred to as the ‘additional dwelling supplement’) and the flat 15% rate for non-natural persons.The existing residence rules for other taxes do not apply for SDLT. Instead, separate residence tests apply for SDLT, as discussed below. It is important to look at the detail of the test, as sometimes the outcome is counter intuitive. For example, a UK resident close company is considered non-resident for SDLT if it is controlled by one or more non-residents.It is important to remember that if the transaction is eligible for an SDLT relief that reduces or exempts a charge to SDLT, this also applies to the non-resident surcharge. For a list of SDLT reliefs, see the Stamp duty land tax ― basic rules for companies guidance note.The increased rates for non-resident transactions apply to land transactions with an effective date of 1 April 2021 onwards.HMRC has published full guidance on the non-resident surcharge on the GOV.UK website and in SDLTM09850.SDLT rates to which the non-resident surcharge appliesThe increased rates for non-resident transactions are 2% more than the effective rate

SDLT on property disposals by individuals

SDLT on property disposals by individualsStamp duty land tax (SDLT) is generally payable on the purchase or transfer of property or land in the UK where the amount paid is above a certain threshold. If the consideration is over £40,000, the transaction must be notified to HMRC on an SDLT return, even though no SDLT may be due. When it was originally introduced, SDLT applied to all UK land transactions. Devolution has resulted in Scotland and Wales introducing their own regimes.From 1 April 2015, land and buildings transaction tax (LBTT) applies to land transactions in Scotland. For details of LBTT, see Sergeant and Sims on Stamp Taxes AA12–AA22 (SSSD, AA[AA351]–SSSD, AA[AA862]). See also the guidance on the Revenue Scotland website. From 1 April 2018, land transaction tax (LTT) applies to land transactions in Wales. For details of LTT, see Sergeant and Sims on Stamp Taxes AA23–AA34 (SSSD, AA[AA901]–SSSD, AA[AA2115]). See also the guidance on the Welsh Revenue Authority website. Whilst the underlying rules applying to LBTT, LTT and SDLT are broadly similar in nature, the taxes are not identical. The rest of this guidance note covers the law which applies to transactions in England and Northern Ireland.Since SDLT is normally paid by the purchaser in the transaction, there are only limited points for the vendor to consider. SDLT is discussed further in the SDLT on property acquisitions by individuals guidance note.Linked transactions and multiple dwellings reliefA request by the purchaser for the vendor to split the disposal into a

Weekly case highlights ― 14 October 2024

Weekly case highlights ― 14 October 2024These are our brief notes and thoughts on cases published in the last week or so which caught our eye and are likely to be of particular interest to tax practitioners. Full case reports and commentary on most of these cases will be included within our normal reference sources in the coming weeks.Tax administrationE v HMRCThe taxpayer here had kept no business records and had failed to notify HMRC of his liability for almost two decades. Not surprisingly, the tribunal accepted that HMRC had made a discovery of income which had not been assessed and confirmed (with some minor adjustments) the assessments which had been raised.The real interest in the case is the application for anonymity. The appellant argued, as one of his grounds of appeal, that he was being financially assisted by family in a country with a poor record regarding human rights and which has been known to take action against residents who provide support to family members in countries such as the UK. He was concerned that there would be significant risk to his family in that country if the decision was not anonymised.The tribunal accepted his argument: it considered that there would be a clear and significant risk to the safety of his family overseas if the appeal was held in public. As a result, the appeal was heard in private and the decision published with the taxpayer’s details anonymised. Butt v HMRCThis is a strange case. HMRC had

Tolley’s monthly tax case tracker 2024

Tolley’s monthly tax case tracker 2024This tax tracker tool displays the current status and most recent developments of direct tax cases being heard by the Upper Tribunal (UT), the Court of Appeal, the Court of Session, the Supreme Court and the EU Court of Justice as at 9 December 2024. It is updated on a rolling monthly basis.The tracker is split into three parts:•Cases subject to an appeal•Cases potentially subject to an appeal, and•Finalised tax casesRecent updates are shown below in bold.Cases subject to an appealThis section of the tracker shows cases that are currently subject to an appeal.Name of parties and citationCurrent statusA D Bly Groundworks and Civil Engineering Limited v HMRCCA/2024/001410; [2024] UKUT 104 (TCC); [2021] UKFTT 445 (TC)Corporation tax-provision for pensions liabilities The FTT found that the primary purpose of entering into an unfunded pension arrangement (which had been notified under DOTAS) was to reduce their corporation tax liability without incurring any expenditure; and that the liability to pay pensions under those arrangements did not generate deductible expenses (even though there were pensions being paid out). The FTT also found that the creation of such a scheme is not a payment or transfer from which benefits will be provided under the EBT regime. The UT dismissing the appeal upheld the FTT’s conclusion that the pension liabilities were not incurred wholly and exclusively for the purposes of a trade and accordingly the deductions claimed should not be

Weekly case highlights ― 11 November 2024

Weekly case highlights ― 11 November 2024These are our brief notes and thoughts on cases published in the last week or so which caught our eye and are likely to be of particular interest to tax practitioners. Full case reports and commentary on most of these cases will be included within our normal reference sources in the coming weeks.Business TaxSyngenta Holdings v HMRCThis is another in the recent line of cases on the unallowable purpose test in the loan relationships regime. The transaction in question was a fairly straightforward intra-group reorganisation where the sale of one company to another group company was funded in part by debt. The question was whether the interest payable on that debt was deductible or whether it was incurred for an unallowable purpose, in which case no deduction would be available. The company incurring the interest obtained no tax benefit itself – the benefit was at group level because the interest deduction was offset against the liabilities of another group company.The decision discloses a vast amount of documentation relating to the project, including internal briefing notes and correspondence with advisers. This shows that from the beginning taxation was a vital element of the reorganisation. Indeed the first documentary evidence of the transaction was on a spreadsheet headed 2010 UK tax projects. Although the directors of the company attempted, when giving evidence, to downplay the importance of tax to the project the tribunal was firmly of the view that this was a tax-driven transaction. Its

SDLT on property acquisitions by individuals

SDLT on property acquisitions by individualsIntroductionStamp duty land tax (SDLT) was introduced for land transactions with effect from 1 December 2003. Whereas stamp duty was a tax on documents, SDLT is a tax based on the acquisition of a chargeable interest, whether or not evidenced in writing. When it was originally introduced, SDLT applied to all UK land transactions. Devolution has resulted in Scotland and Wales introducing their own regimes.From 1 April 2015, land and buildings transaction tax (LBTT) applies to land transactions in Scotland. For details of LBTT, see Sergeant and Sims on Stamp Taxes AA12–AA22 (SSSD, AA[AA351]–SSSD, AA[AA862]). See also the guidance on the Revenue Scotland website. From 1 April 2018, land transaction tax (LTT) applies to land transactions in Wales. For details of LTT, see Sergeant and Sims on Stamp Taxes AA23–AA34 (SSSD, AA[AA901]–SSSD, AA[AA2115]). See also the guidance on the Welsh Revenue Authority website. Whilst the underlying rules applying to LBTT, LTT and SDLT are broadly similar in nature, the taxes are not identical. The rest of this guidance note covers the law which applies to transactions in England and Northern Ireland only.This guidance note focuses on the rules for transactions where the purchaser is an individual. For details of the SDLT rates that apply to these transactions, see the SDLT on property acquisitions by individuals ― tax rates guidance note.For the rules that apply to companies, see the Stamp duty land tax ― basic rules for companies guidance note.OverviewLand transactions are chargeable to SDLT,

Spring Budget 2024

Spring Budget 2024Chancellor Jeremy Hunt delivered his Spring Budget on 6 March 2024, setting out further proposals to stimulate growth in the economy in advance of a General Election.The key changes / announcements made are summarised below. Detailed analysis will follow in all of our usual sources.Personal taxesAbolition of the remittance basis of taxationUK resident individuals who are not domiciled or deemed domiciled in the UK currently have the choice to pay tax on the remittance basis (meaning UK tax is only paid on foreign income and gains to the extent that these are brought to the UK in the tax year) or the arising basis (meaning UK tax is payable on worldwide income and gains arising in the tax year).From 6 April 2025, the remittance basis of taxation is expected to be abolished. This is to be replaced by a new regime linked to the number of years of UK residency.Individuals will not be taxed in the UK on their foreign income and gains for the first four tax years of UK residency, under a new system called the ‘foreign income and gains’ regime (also known as FIG). They will be free to bring the foreign income and gains arising in those tax years to the UK without suffering a UK tax liability, in a departure from the existing remittance basis rules. They will also not pay tax on non-resident trust distributions. They will not however be entitled to a UK personal allowance or annual exempt amount. From

Stamp duty land tax ― basic rules for companies

Stamp duty land tax ― basic rules for companiesIntroductionStamp duty land tax (SDLT) is generally payable on the purchase or transfer of interests in land and buildings in England and Northern Ireland where the amount paid is above a certain threshold. In addition, most of these transactions must be notified to HMRC on an SDLT return (also known as a land transaction return), even if no tax is due. See the SDLT ― administration guidance note for further commentary on notifiable transactions.From 1 April 2015, land and buildings transaction tax (LBTT) applies to land transactions in Scotland. For details of LBTT, see Sergeant and Sims on Stamp Taxes AA12–AA22 (SSSD, AA[AA351]–SSSD, AA[AA851]). See also the guidance on the Revenue Scotland website. From 1 April 2018, land transaction tax (LTT) applies to land transactions in Wales. For details of LTT, see Sergeant and Sims on Stamp Taxes AA23–AA34 (SSSD, AA[AA901] – SSSD, AA[AA2101]. See also the guidance on the Welsh Revenue Authority website. Whilst the underlying rules applying to LBTT, LTT and SDLT are broadly similar in nature, the taxes are not identical. The rest of this guidance note covers the law that applies to transactions in England and Northern Ireland only. This guidance note focuses on the rules for transactions where the purchaser is a company. For details of the SDLT rates that apply to these transactions, see the Stamp duty land tax ― basic rules for companies ― tax rates guidance note.For the rules that apply to individuals,