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:

By the time this edition drops into your inbox it will be election day. Several of the main political parties have included tax revenues from closing the Tax Gap in their manifesto costings. So HMRC’s publication of the latest 2022/23 Tax Gap figures was very timely. And whilst most taxes, as a percentage of theoretical liabilities, continue their steady tick downwards, the Corporation Tax Gap has bucked that trend, particularly among small businesses. There will be much in the figures for the next Government to chew on.

Any attempt to narrow the Tax Gap will inevitably mean more compliance activity by HMRC. Our second article covers late interest charges in tax disputes, an area which is often overlooked. But the increasing length of enquiries combined with higher interest rates have brought the issue into sharper focus. And while we are on the theme of interest on tax, why not check out our Indirect Tax Talking Points which includes a case where the taxpayer sought additional interest on overpaid VAT.

In other articles we cover a number of First-tier Tribunal decisions:

• Firstly, two decisions on estoppel and public law, both of which are an important reminder of the difficulties which taxpayers can face when HMRC change their position retrospectively or assess historic tax contrary to a previous agreement;
• Secondly, a case which considers the previously untested rule disallowing losses on a loan relationship recognised by a company after coming within the scope of UK corporation tax but ‘referable’ to a time when the company was not within the scope of UK corporation tax in respect of the loan; and
• Finally, a case of interest to those working in the Oil and Gas sector which addresses the interaction of the trade succession rules and ring fence oil taxation provisions.

By now some of you will be wondering where your regular Pillar Two update is. Fear not, because we have a Webinar coming up on 11 July which will cover the latest tranche of guidance from the OECD/G20 Inclusive Framework issued on 17 June. Registration details are in our Other News in Brief section, and we also include a link to KPMG International’s detailed commentary on the guidance for those that can’t wait for the Webinar! We also provide an update on registration requirements in Belgium.

Finally, in Other News In Brief, we post links to our latest UK and Global economic outlooks. The UK one provides much food for thought as we enter a new Parliament.  We may see a period of modest growth for the rest of the year but there remains very little fiscal headroom.