The Chancellor, Rachel Reeves, has announced that the first budget of the new parliament will be held on 30 October 2024. We consider the Chancellor's options to repair a £22 billion 'hole' in the public finances. A range of measures that are in line with Labour's manifesto were also announced this week. We take a closer look at what is to come.
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In this week's tax update, we feature HMRC's new Agent Update, consider the Budget Responsibility Bill and have a Court of Appeal decision on Double Tax Relief. There is more from the tribunals on Research & Development relief (R&D).
HMRC have published Agent Update 121 for July 2024. Here is our summary of the highlights in direct and indirect tax announcements affecting SME owners and advisers.
In GE Financial Investments Limited v HMRC [2024] EWCA Civ 797, the Court of Appeal (CoA) overturned the Upper Tribunal’s (UT’s) decision that the UK-incorporated company was also US resident under the UK/US Double Tax Agreement (DTA). The claim for Double Tax Relief (DTR) in the UK was denied.
In Tills Plus Limited v HMRC [2024] TC9235, a company's director failed to provide sufficient detail that his company's project met the definition of R&D. There were unusual payment arrangements with a subcontractor in Iran and the claim was rejected by the tax tribunal.
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The King's Speech did not reveal anything that we did not really know in terms of the new government's policies, and subsequently it published more detail on the first bills that will go before the new parliament. HMRC is really ramping up the stakes now by sending out 'one to many' letters to Persons of Significant Control (PSC) on the Companies House register as well as to deemed contractors under the Construction Industry Scheme (CIS) rules: watch out for these: they constitute a 'nudge' and need to be acted upon. We have several tax cases which are all topical in their own right, covering Research & Development (R&D), carried interests, tax relief on investment management fees and failure to notify.
The Welsh Government has published a summary of responses to its earlier Land Transaction Tax (LTT) consultation which proposed changes to reliefs, including the abolition of Multiple Dwellings Relief (MDR).
In Get Onbord Limited (in liquidation) v HMRC [2024] TC09238, the First Tax Tribunal (FTT) considered the meaning of R&D as whether a project heavily reliant on Open Source coding and software to develop a streamlined and AI-automated process for onboarding new clients under the Money Laundering Regulations (MLR) was actually engaged in 'research and development' in terms of the BEIS Guidelines. The FTT also advised future claimants on their approach to case management.
King Charles III made his speech on the State Opening of Parliament today. He confirmed the 'big ticket measures' that the new government will privatise the railways and introduce a new Great British Energy company. In terms of business and tax it will ensure that every decision is consistent with set fiscal rules and scrutinised by the Office of Budget Responsibility, there will be reforms of audit and corporate governance and new measures on pensions and investment. VAT will be charged on private school fees.
