Following the publication of Finance Bill 2021 (full name: Finance (No.2) Bill 2019-21) on 11 March 2021, the Committee of the whole House has provisionally been scheduled to debate selected clauses from the Bill on 19 and 20 April 2021. The clauses to be debated are set out in a programme motion to be put to the House on 13 April 2021 and include, amongst others, the legislation to bring in the ‘super-deduction’ and corporation tax rate changes. Following the Committee of the whole House, the Public Bill Committee stage will commence and this will be concluded no later than 6 May 2021. Further dates for the remaining stages of the Bill have not yet been published.

The OECD has proposed changes to the commentary on Article 9 of its Model Tax Convention, on which many bilateral double taxation agreements are based. Article 9 requires that international transactions between related parties should be priced, for tax purposes, in accordance with the arm’s length principle. This is not an issue, but the published commentary is valuable in applying this basic principle to practical situations. The main change proposed to the commentary relates to the application of Article 9 to financial transactions. This can be complex, with questions not only over the ‘price’ of an arrangement (e.g. the interest rate) but also whether the corresponding arm’s length arrangement would be debt at all (or rather, for example, equity). This was addressed in depth by the OECD in its February 2020 paper Transfer Pricing Guidance on Financial Transactions; the latest proposals would integrate this within Article 9 (with consequential amendments to other Articles of the model treaty). Comments are requested by 28 May 2021.

The ICAEW have published an updated tax guide in respect of COVID-19 and displaced workers. This includes the text of letters they have sent to HMRC and the Financial Secretary to the Treasury, and HMRC’s responses. This contains clarifications on the residency, tax and social security treatment of employees who have been displaced due to COVID-19.

The Supreme Court has granted HMRC permission to appeal the Court of Appeal (CA) decision in HMRC v NCL Investments Ltd [2020] EWCA Civ 663. This will interest companies that claimed corporation tax deductions in respect of lapsed employee share options in periods that ended prior to 20 March 2013. However, the CA’s judgment also considered the importance of generally accepted accounting principles for tax purposes more broadly. Please see our previous article on this case for more information.

In a landmark case for the care sector, the Supreme Court upheld that sleep-in shifts are not ‘working time’ for National Minimum Wage purposes. This provides clarity on one of the most contentious minimum wage issues facing tribunals, and the care sector. Donna Sharp of KPMG Law shares her perspective.

The European Court of Justice (ECJ) recently issued a judgment examining ‘working time’ for the purposes of the Working Time Directive, which was implemented in the UK by the Working Time Regulations. UK domestic courts and tribunals may ‘have regard’ to post-Brexit ECJ case law so far as it’s relevant to domestic law. Donna Sharp of KPMG Law considers what UK employers should take from this decision.