Tax Matters Digest

Our spotlight article this week focusses on one of the measures in the Chancellor’s speech - the surprise announcement that the foreign permanent establishment exemption will become compulsory for accounting periods starting after 31 December 2026, although for many oil and gas groups it will have effect from 1 September 2026. This means that profits and losses attributable to foreign permanent establishments will be excluded from UK corporation tax. Although the change was positioned as responding to specific concerns, the measure will have general effect and so will be of interest to all multinationals. Our article sets out what we know so far.

Our second article looks at an update published by the OECD on 18 May in relation to the GloBE Information Return (GIR) central filing. This will be particularly helpful for calendar-year groups with a 30 June 2026 GIR filing deadline. Our article highlights the key practical implications for UK MNEs in relation to GIR central filing, together with links to a more detailed analysis from KPMG International.

Channelling his inner Bard, Phil Roper, our resident Transfer Pricing specialist pens our next article which looks at the recent European Court ruling in Stellantis Portugal S.A. and asks the question ‘VAT or no VAT, that is the question’. There have been several recent CJEU decisions on the VAT treatment of transfer pricing adjustments. In this article, Phil compares and contrasts the findings in Stellantis with the SC Acromet Towercranes SRL case and, whilst both cases were released after the end of the UK’s exit transition period from the EU, asks whether HMRC will update some of their guidance in light of the findings.

Following an announcement at Autumn Budget 2025, HMRC have now launched a voluntary pilot R&D advance assurance service for small and medium sized enterprises. The pilot will run until 2027 and our article sets out the companies that can use the pilot and the areas on which advance assurance can be sought, as well as the practicalities of application.

Our next article provides a timely reminder that the deadline for share plan reporting is fast approaching. We provide a list of some of the more complex areas that may need extra consideration, as well as areas where HMRC may have issued new guidance or changed their policy.

Finally, we provide a link to Tim Sarson’s latest City AM column which says that Brits aren’t spending enough and it is time for a ‘Splash out to Help Out’ scheme to be launched.

Other News in Brief this week highlights a number of developments including:

• The Chancellor’s announcements on various tax related changes in response to the conflict in Iran;
• Pillar Two - the updating of lists of territories with qualifying income inclusion rules and qualifying domestic top-up taxes;
• HMRC technical guidance published on the taxation of various payments made by developers and others to landowners for the provision of ‘ecosystem services’;
• The publication of a technical consultation on the High Value Council Tax Surcharge as announced at Autumn Budget 2025;
• The launch of a consultation on the certification for mechanically recycled plastic for Plastic Packaging Tax purposes;
• The publication of draft regulations for consultation on information sharing for the inclusion, from April 2027, of certain pension scheme assets within the scope of inheritance tax;
• The agreement of a new UK and Isle of Man social security agreement;
• HMRC publication of the synthesised text of the Multilateral Instrument and UK-Bahrain, UK-Cote D’Ivoire and UK-Ukraine Double Taxation Conventions; and
• We also provide a link to KPMG UK’s May 2026 Economic Outlook.

Finaly, we include a link to the latest edition of our Indirect Tax Talking Points (just one this week) which gives an in-depth VAT analysis of the Stellantis case mentioned above, and our global Week in Tax publications.