Other news in brief

As the 30 June 2026 deadline looms for UK Pillar Two filings, HMRC have confirmed that under their 'transitional approach', they will not be charging late filing penalties if the returns are submitted by 31 July 2026. This includes GloBE Information Returns (GIR), Domestic Top-up Tax and Multinational Top-up Tax returns, and Overseas Return Notifications. This follows earlier confirmation that the UK supports the approach set out by the OECD with details of the transitional approach that will apply in the UK where the filing deadline for the GIR is no later than 31 December 2026.

As discussed in our earlier article on the decision of the First-tier Tribunal, this case highlighted the complexities that can arise in determining when costs relating to debt funding or financial guarantees fall to be dealt with under the ‘loan relationship’ regime. In a lengthy decision (Swiss Centre Limited v HMRC [2026] UKUT 00227 (TCC)), the Upper Tribunal has now comprehensively rejected the taxpayer’s appeal against that earlier decision. Whilst much of the appeal was concerned with challenges to the First-tier Tribunal’s weighing of the particular factual evidence before it, the Upper Tribunal’s brief observations on the question of when payments by a guarantor give rise to a loan relationship and when resultant debits may be disallowed as not being only for “the business or other commercial purposes” of the taxpayer itself will be of wider interest.

On 15 June 2026, the OECD published a consultation proposing targeted amendments to the Model Reporting Rules for Digital Platforms that seek to address issues arising in initial implementation. It includes proposals for clearer guidance on interconnected or functionally integrated systems. Separate but linked websites, apps and regional instances may be treated as a single Platform where they operate together to connect sellers and users. This is relevant to scoping where multiple entities or systems contribute to a single user journey, with the examples seemingly addressing scenarios which might be argued as out of scope, but where the OECD believes they should be in scope. The paper also proposes clarifications to the treatment of chains of platforms and intermediaries, particularly in the property rental sector. Intermediary sellers that effectively make a platform available to underlying providers may themselves be treated as platform operators. The proposals include mechanisms to limit duplication where a seller is already a reporting platform. In addition, the consultation proposes amendments to the carve‑out for the sale of goods by removing the transactions threshold (previously >30) and introducing a higher €3,000 threshold. This would exclude many low‑value sellers from reporting but is only applicable to the sale of goods and not to all platforms. Given the proposed DAC rewrite expected from the European Commission, it will be interesting to see how these two align. Comments have been requested by 14 August 2026.

On 10 June 2026, HMRC published a consultation detailing the current tax position, and proposed solutions for UK resident individuals investing in so-called reverse hybrids, being entities which are tax transparent under local law but opaque from a UK tax perspective. UK-resident individuals investing in reverse hybrid entities can suffer high effective tax rates due to the lack of double tax relief under either treaties or UK domestic law. The consultation uses the example of US Limited Liability Companies (LLCs) – these are usually tax transparent for US tax purposes, but HMRC’s view is that they are almost always opaque for UK tax purposes - despite the outcome of Anson v Commissioners for HM Revenue and Customs [2015] UKSC 44. This can have a particular impact on US citizens resident in the UK (or considering a relocation to the UK) as well as non-US citizens holding an interest, or making an investment, in such an entity. The main option under consideration is to treat reverse hybrid entities which meet certain conditions as being tax transparent for UK capital gains tax and income tax purposes. The aim would be to charge UK resident individual members of the LLC to UK tax on the underlying profits, income and gains of the foreign entity in a way that matches the tax treatment in the relevant foreign jurisdiction, thereby enabling double tax relief. The consultation specifically states that no equivalent changes would be introduced for UK-resident corporate members. HMRC are also seeking views on whether the transparent treatment should apply automatically or via election and on alternative forms of relief, such as giving a deduction or credit for foreign tax paid. Comments on the proposals are invited by 31 July 2026. KPMG will be preparing a response to the consultation.

HMRC have added synthesised text of the Multilateral Instrument and the 2002 UK-South Africa Double Taxation Convention to the collection of published tax treaties on their website. The synthesised text reflects the changes made to those treaties by the OECD’s Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (commonly known as the Multilateral Instrument or MLI).

The UK and India have agreed that the new UK-India Double Contribution Convention will come into effect from 15 July 2026. It was also announced that the new agreement will cover assignees whose period of work overseas will not exceed 60 months (rather than the 36 months initially announced). Full information can be found in found in our Flash Alert.