Other news in brief

A round up of other news this week.

A round up of other news this week.

Spring Finance Bill progress

Finance (No. 2) Bill 2024 (widely referred to as the Spring Finance Bill) had its second reading in Parliament on 17 April 2024. The next stage is the Committee of the whole House where MPs will debate a small number of Clauses which have been selected as follows: Clauses 1 to 4 (income tax charge and rates etc); Clauses 12 and 13 (corporation tax charge and rates etc); and Clause 19 (energy security investment mechanism). At the time of writing a date for the Committee of the whole House had not been published. The remainder of the Bill will then be scrutinised by a Public Bill Committee which is scheduled to conclude by 23 May 2024. The contents of the Spring Finance Bill were covered in a previous article in Tax Matters Digest

New HMRC power to amend list of Common Reporting Standard (CRS) reportable countries by Notice instead of by Regulation

The International Tax Compliance (Amendment) Regulations 2024 have been laid before Parliament and give HMRC the power to amend the list of reportable countries for the purposes of the CRS by Notice, instead of by Regulation. Following the enactment of s349 Finance (No.2) Act 2023, this means that HMRC no longer need primary legislation to give effect to new Automatic Exchange of Information regimes, or secondary legislation to give effect to new exchange agreements for CRS purposes. This approach was already adopted for digital platforms in the Platform Operators (Due Diligence and Reporting Requirements) Regulations 2023 and is likely to serve as the model for the adoption of the Crypto-Assets Reporting Framework. The first Notice published under this new approach, on 23 April 2024, directs readers to the HMRC International Exchange of Information Manual for the list of reportable jurisdictions.

First-tier Tribunal (FTT) finds that grandfathering provisions on carried interest did not apply to final disposal of fund assets

In a lead case behind which the appeals of other members of a limited partnership are stayed, the FTT considered provisions introduced by Finance (No. 2) Act 2015 on the taxation of carried interest and similar returns. The new provisions included a grandfathering clause for carried interest which arose “in connection with the disposal of…assets of…partnerships” before 8 July 2015. In this case the carried interest arose on the final disposal of fund assets where previous asset disposals had taken place before 8 July 2015. Those earlier disposals were at a profit, but not sufficient to meet the fund’s carried interest hurdle of 9 percent internal rate of return (IRR) (i.e. the distribution ‘waterfall’). Although the last asset disposal was less than the acquisition price (so an overall loss), the proceeds were sufficient to take total distributions for the fund over the 9 percent hurdle and result in payment of carried interest. This last disposal and payment of carried interest took place after 8 July 2015. The taxpayer argued that the grandfathering provisions applied as the carried interest arose in connection with disposals prior to 8 July 2015 as that was where the overall fund profit derived from. However, the FTT agreed with HMRC’s analysis that the carried interest arose in connection with the disposal of the last asset and therefore the carried interest which arose post 8 July 2015 was taxable.

Government response to consultation on devolving powers for a Scottish Building Safety Levy

On 19 April 2024, the UK and Scottish Governments published a joint response to the recent consultation on devolving powers for a Scottish Building Safety Levy. The response summarises the views and evidence received, provides the UK and Scottish Governments’ analysis and response, and sets out next steps. Following this joint consultation with the Scottish Government, the UK Government will propose legislation to devolve powers to the Scottish Parliament so that the latter can legislate for a Scottish Building Safety Levy.