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:

Normally it is difficult to get much interest in what we think is going to happen in a fiscal event until a few weeks before. I don’t know what you think, but this Autumn Budget seems somewhat different! So we decided to bow to the inevitable, and release our Budget Predictions now. But with the Resolution Foundation pointing out that, following the past eight elections, the first two fiscal events of each parliament have introduced new tax policies that have raised taxes by an average of £21 billion per year, are we really in the uncharted territory we are led to believe? Our Predictions article asks what announcements we might see on 30 October, and whether it will really be as bad as we are all expecting.

This week has been Labour conference week and some tax policy has started to drop. On 23 September, Rachel Reeves gave her first conference speech as Chancellor of the Exchequer. Alongside this HM Treasury issued a press release setting out some changes to tax administration. The changes very much build on proposals set out by Labour before the election in their ‘Closing the Tax Gap’ document and include a planned digital transformation roadmap as well as an update on additional HMRC resource. In Sir Keir Starmer’s speech on 24 September, he began to whet our appetite for Labour’s ‘flexible Growth and Skills levy’ which we highlight in Other News in Brief, their replacement for the apprenticeship levy. More may be revealed on both of these at the Budget.

September is normally a time to come back refreshed after recharging batteries over the summer break. But for those advising non-domiciled individuals there has been no let up. Policy announcements at the end of July were followed by a summer of engagement with policy officials. Our latest article on the non-dom reforms provides an update as we head into Budget season.

For employers, we include an article on a Supreme Court decision in Professional Game Match Officials Ltd (PGMOL), yet another case concerning employment status.  Following the Supreme Court’s conclusion that the mutuality of obligation and control tests were met, the matter has been kicked back to the First-tier Tribunal for further consideration of whether the referee contracts were contracts of employment. This long running case is well and truly in extra time but it looks like the final whistle may still be some way off.

In a development for multinationals, the European Court of Justice has handed down its judgment concerning the UK’s CFC Group Financing Exemption. As expected, it follows the Advocate General’s opinion and annuls the Commission’s decision. Our article covers what happens next for affected taxpayers.

Multinationals will also be interested in HMRC’s draft guidance on the implementation of Pillar Two, issued for consultation on 12 September. This is the third edition of draft guidance but, before you get excited, it will not be the last. Comments are invited by 23 October.

In Other News In Brief we cover the OECD’s signing ceremony for the Multilateral Convention to facilitate the implementation of the Subject to Tax Rule within the Pillar Two regime, regulations covering information requirements for the merged R&D expenditure credit and two pieces of updated HMRC guidance, the first for certain overseas companies to register for corporation tax and the second on registering a corporate interest restriction reporting company. We also highlight a recent KPMG article breaking down the new Government’s ‘Make Work Pay’ initiative into key strategic areas to help employers work though what changes and obligations might be ahead. And as usual we include our roundup of indirect tax cases in Talking Points and international updates in Week In Tax.

Finally, in his regular City A.M. column our Head of UK tax policy, Tim Sarson, discusses some of the tax-raising post-election Budgets the UK has seen in the past.