Tax Matters Digest

Our spotlight article this week provides a valuable summary of the tax aspects of the speech and associated publications. In addition we provide specific articles that focus on two new consultations that were both promised in the Corporate Tax Roadmap published at Autumn Budget 2024:

• Improving tax certainty for business proposes a new advanced clearance on the corporation tax treatment of large and innovative investment projects. The proposals include a number of features that will make a valuable contribution to our corporate tax regime. As part of the same consultation the Government has also set out that it intends to offer clearances on the treatment of Cost Contribution Agreements through the existing legislation on Advance Pricing Agreements which will appeal to those more generally within the scope of the transfer pricing rules. Our article provides more detail ; and
• The Government also published a consultation on the research and development (R&D) tax regime which considers the benefits of advanced assurance clearances for R&D claims in order to provide more certainty to businesses and to tackle error and fraud. The consultation also looks at wider aspects of the R&D tax regime and will be of interest to all those actively involved with or considering making R&D claims.    

The only tax announcement in the speech itself was the Government’s intention to tap the money tree more commonly known as ‘the Tax Gap’ for another £1 billion per year by the end of the forecast period. This builds on the announcements made at Autumn Budget 2024 and it is clear that wealthy individuals will form a main focus of the increased compliance activity. Our article provides more information on what can be expected. 

A technical note on Making Tax Digital (MTD) also featured in the outputs from the Spring Statement. Our article highlights the contents of that technical note as well as detailing plans to increase late payment penalties for VAT taxpayers and Income Tax Self Assessment taxpayers as they join MTD, from April 2025 onwards.

Our final article on the Spring Statement explores the new PISCES trading platform which is intended to facilitate trading in private company shares and is expected to launch later this year. PISCES is intended to give private companies’ shareholders – including employees – a new way to obtain liquidity in their shares. A technical note on some of the tax implications was issued at Spring Statement and we summarise these technical points as well as setting out what private companies may need to consider in deciding whether to allow their shares to be traded on a PISCES platform.

Our case law update in this edition features two cases. The first is a recent First-tier Tribunal case, Sajedi & Ors v HMRC which concerned relief from the higher rates of Stamp Duty Land Tax (SDLT) where a main residence is replaced. The judgment applies the Ramsay line of case law to the meaning of a disposal and provides a stark warning that the Tribunal will make every effort to quash any perceived avoidance of SDLT, even if it means arguing points of law on which neither party has made submissions. 

The second case focuses on the recent Court of Appeal decision in Orsted West of Duddon Sands (UK) Ltd v HMRC (formerly known as Gunfleet Sands) which considered whether environmental and technical study costs for offshore windfarms could qualify as capital expenditure for capital allowance purposes and which provides crucial guidance for taxpayers with large infrastructure projects involving preliminary expenditure.

The sharp eyed among our readers will have noticed that the tax year end is almost upon us and so we also include in this edition a number of employee focussed highlights. The first article challenges as to whether you are making the most of opportunities that the year-end reporting process can provide whilst the second looks at the specific issue of share plan reporting including the deadline for registering new employee share plans or other reportable arrangements and submitting the relevant returns (including ‘nil’ returns). Whilst the focus is on employment taxes we have also included an article which highlights the risk that cyber-attacks can pose to key people data, payroll, and employment tax processes and how employers can think about protecting their bottom line. Finally we provide a link to an article on the new UK Foreign Income and Gains (FIG) regime which was published by KPMG in the US in Mobility Matters.

In Other News this time we cover the latest regulations to implement Pillar Two,  updates to additional information form requirements for creative industry tax relief, changes to the HMRC interest rate for late paid tax, a delay to the Building Safety Levy implementation, the latest on the Finance Bill (now the Finance Act 2025) and National Insurance Contributions Bill, and the new UK/Peru double tax treaty.

As per usual, we also include links to our regular Indirect Tax Weekly Talking Points and updates from KPMG member firms around the world.