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 Stefanie Redmond here:

It's the most wonderful time of the year..… except of course if you work in corporate tax compliance, in which case you’re probably battling with December year ends, desperate to activate your out of office. It will all be over soon - in the meantime we hope this final Tax Matters Digest of 2024 provides some respite to help you through busy season.

2024 was a pivotal year for tax policy in the UK, with a change in Government sandwiched by two very different Budgets - the latter continuing to make waves today. Labour has promised certainty and stability on tax policy, with one major fiscal event per year, so things should settle down somewhat in 2025. The first test for this may come on 26 March: Rachel Reeves has confirmed there will be an OBR economic and fiscal forecast on this date, which she will respond to with a parliamentary statement. Will this really be a traditional ‘Spring Statement’ with few, if any, significant tax announcements? One would hope so: but at Tax Policy HQ, nothing surprises us anymore!

The other big news in 2024 was of course the US election result. With President-Elect Trump talking about broad ranging tax cuts and Tariffs, 2025 will certainly not be quiet on the international front. 

Amongst all of this drama, the day-to-day business of tax continues. Our spotlight article explores the First-tier Tribunal’s (FTT) decision in the Blackfriars Hotel case. This involved the application of the anti-loss refreshing rules in Part 14B CTA 2010; but the decision is also of broader interest, indicating a potential approach to future disputes over what constitutes an appropriate counteraction under other anti-avoidance rules.

Sticking with the FTT, we look at the comprehensive win for the taxpayer in Stage One Creative Services, concerning the application of the ‘subcontracted’ and ‘subsidised’ SME scheme conditions for R&D. These are issues regularly queried by HMRC, making this a must-read for companies claiming R&D - especially those subject to ongoing HMRC enquiries in these areas.

The December Scottish and Welsh Budgets are usually muted affairs in comparison with other tax policy events. We look at what was announced - and explain why things may not remain quiet for long. We also look at the status of the Northern Ireland Budget.

Following the European Court of Justice’s recent annulment of the EC’s finding of unlawful State Aid in the ‘CFC Finco’ case, HM Treasury has issued regulations to provide for the repayment of ‘State Aid’ and interest paid by affected companies. Our article discusses these regulations, due to come into force on 31 December 2024. Continuing the international theme is Tim Sarson’s latest International tax review, originally published in Tax Journal.

Looking to the future, KPMG International’s Global Head of Tax Policy, Grant Wardell-Johnson, brings you everything you need to know about the future of the international tax political architecture – in just three minutes. There is also plenty more to explore in our Other News in Brief (including important information for platform operators in scope of the new Model Rules for Digital Platforms) as well as our regular Indirect Tax Weekly Talking Points and Week in Tax international updates.

All that remains is to say a huge thank you to all of the Tax Matters Digest editorial team and contributors who have worked tirelessly in 2024 to bring us insightful tax analysis, and to wish you all a very Merry Christmas when it comes. We'll be back in 2025 for what promises to be an eventful year in the world of tax…..

Stefanie Redmond
Senior Manager, Tax Policy
KPMG in the UK