Tax Matters Digest

Once you have had your fill of tariffs, and as an alternative to getting off the world for a while until it all clams down, perhaps you will find a little relief, as I have, in sitting down and reading our latest edition of Tax Matters Digest. Yes, our tax system can feel a bit chaotic and frustrating, but stability and certainty are relative, and at the moment I am finding the familiarity of yet another set of tax developments strangely comforting, like my favourite pair of slippers.

This week’s spotlight article is on company cars and the implications of mandatory payrolling of benefits. Mandatory payrolling is still a year away, but even employers that have adopted voluntary payrolling of benefits still tend to deal with company car benefits via the P11D form due to complexity. This article sets out some of the complications of transitioning company car benefits to mandatory payrolling, provides a roadmap to implementation, and invites you to get in the driving seat (do you see what we did there?).

Our next two articles are relatively niche. The first looks at the ongoing saga of the application of the Targeted Anti Avoidance Rule to Condition C of the Salaried Members provisions, where guidance has now been issued. The second considers the latest HMRC ‘nudge campaign’, targeting those that provide security services. HMRC are proactively enforcing best practice labour supply chain assurance in sectors they consider to be high risk and our article will interest businesses in that sector.

In our case law update we are taking the unusual step of highlighting a non-binding Advocate General’s (AG) Opinion in the EU. The AG in this case, which focussed on the VAT treatment of intra-group transactions and transfer pricing arrangements, found that transfer pricing adjustments were subject to VAT whilst also stating that each situation would need its own assessment. It is likely to be a few months at least before we see the final judgment from the CJEU and there are other cases on the same subject in the pipeline. It is to be hoped that these may begin to bring some much needed clarity in this area.

Still on the subject of Transfer Pricing, we provide a link to a recently published HMRC webinar which has been added to their Guidelines for Compliance providing “Help with common risks in transfer pricing approaches” and will be of interest to all UK members of multinational groups.

There has been some concern over HMRC’s approach to a filed Interest Restriction Return in circumstances where the group has failed to submit a valid reporting company notification (i.e. would the Return be invalidated). Our article provides a brief update on HMRC’s latest position.

Our next article looks at new guidance published by HMRC on the calculation of penalties where there are issues with Automatic Exchange of Information compliance (AEOI). With UK AEOI reporting due by 31 May 2025, and ‘CRS2’ due to commence from 1 January 2026, financial institutions may want to consider whether their current compliance efforts would be satisfactory from HMRC’s perspective and, in particular, whether obligations for accounts opened, changed or reported after 1 January 2026 are robust.

Before you get too comfortable with the familiarity of the usual melting pot of UK tax developments, we include a link to Tim Sarson’s regular International Tax review for Tax Journal for March 2025, which takes you full circle back into the world of tariffs again.

Last but not least we bring you our Other News In Brief which this week includes a Welsh Government consultation on business rates, HMRC updates of interest to employers and individuals following the introduction of the new Foreign Income and Gains regime and residence based Inheritance Tax, news that a consultation on the tax treatment of predevelopment costs has been postponed and a link to our UK Economic Outlook for April 2025. We also include links to indirect tax Talking Points issues as well as a roundup of news from our international tax network.