Tax Matters Digest

To go straight to the articles in the latest edition please scroll down and expand the section/s below that are of interest to you.  For a preview of these articles, read the introduction to the latest edition from Sharon Baynham here:

The last week has seen the main parties issuing their manifestos as the country rolls inexorably towards the General Election on 4 July.

Our spotlight article offers some tax insights into the Labour and Conservative manifestos, as well as highlighting some more eye-catching tax announcements from the other parties. And if that isn’t enough Election action for you, this week we held a webinar on the manifestos and this is available for catch up on our website.

Still on the subject of the General Election, the tax policy team had the opportunity of a round table discussion with Yael Selfin, our chief economist at KPMG in the UK, and David Gauke, Head of Public Policy at Macfarlanes LLP and former Chief Secretary to the Treasury (among other roles). Watch the fascinating discussion about some of the challenges facing the economy and what the next Government may do on tax.

Further afield, the OECD has released a package of updates on its Two-Pillar solution. On Pillar Two, not long after consolidating its previous Administrative Guidance, a fourth tranche has been published alongside a Q&A document summarising the main features of a ‘Transitional Qualification Mechanism’. We have included a high level summary in this edition but look out for more detailed commentary next time. On Pillar One, the OECD published additional guidance on key definitions related to Amount B, its initiative to simplify and streamline the application of the arm’s length principle to baseline marketing and distribution activities. Read KPMG International’s commentary on this. Continuing the international theme we have Tim Sarson’s latest international tax review first published in Tax Journal.

Our employment taxes team highlight an important development in notifying HMRC of the grant of new EMI options on or after 6 April 2024. Although statutory deadlines were recently moved to 6 July following the end of the tax year, some plan rules may include different timescales, for example, requiring the employer to notify HMRC within 92 days of grant. Where this applies there is a risk that the options will lapse or take effect as non-tax advantaged options, irrespective of the change of legislation.  Employers should act urgently where this is the case.  

The team also take a look at the new Code of Practice on allocating worker’s tips which, from 1 October, will mean employers will need to meet new legal requirements for how they allocate and distribute certain tips, service charges and gratuities.

In case news we discuss the Burlington Loan Management DAC case looking at tax treaty anti-avoidance provisions which will be of particular relevance to financial markets participants. Then in Other News we highlight some key points from two recent cases. Firstly, we take a quick look at the latest developments in JTI Acquisition Company (2011) Limited v HMRC where the Court of Appeal has confirmed that the First-tier Tribunal (FTT) was correct to conclude that the debits claimed by JTI Acquisition Company were wholly attributable to an unallowable purpose and no apportionment was necessary. Secondly, the decision of the Upper Tribunal in HMRC’s appeal against the FTT judgment regarding Adrian Chiles’ personal service company. The Upper Tribunal upheld HMRC’s appeal but this area of the tax code remains remarkably difficult to navigate.  

Finally, we include our usual round up of indirect tax and international news.