UK Case Law Developments
The Upper Tribunal (UT) in
Foojit v HMRC dismissed the taxpayer’s appeal against the First-tier Tribunal’s (FTT’s) decision (as reported in our November 2019 UK Tax Round Up) and agreed with the FTT that enterprise investment scheme (EIS) relief was not available for a class of shares owing to the mechanics in the company’s articles of association for paying out dividends. This case shows the importance of careful drafting of share rights if EIS relief is intended.
EIS relief is not available in respect of shares which carry a preferential right to dividends where the amount or timing of the dividends payable pursuant to that right depends on a decision of the company, the shareholder or any other person.
Background
From the beginning of the UK’s first lockdown in March of last year we have reported on the impact of the pandemic on individual and corporate tax residence and permanent establishment risk.
In April 2020 the OECD published guidance on the impact of COVID-19 on double tax treaties (DTTs), including in relation to tax residence, tie breakers and permanent establishments (reported by us in Tax Talks). When reporting on the previous guidance we noted that further consideration would be needed should the pandemic continue for a significant time. Accordingly, the OECD has recently updated its guidance to reflect the pandemic’s persistence and the risk that some measures taken in response to the pandemic may no longer be described as temporary. Key aspects of the latest guidance as regards residence and permanent establishments are set out below.
Friday, February 5, 2021
Background
From the beginning of the UK’s first lockdown in March of last year we have reported on the impact of the pandemic on individual and corporate tax residence and permanent establishment risk.
In April 2020 the OECD published guidance on the impact of COVID-19 on double tax treaties (DTTs), including in relation to tax residence, tie breakers and permanent establishments (reported by us in Tax Talks). When reporting on the previous guidance we noted that further consideration would be needed should the pandemic continue for a significant time. Accordingly, the OECD has recently updated its guidance to reflect the pandemic’s persistence and the risk that some measures taken in response to the pandemic may no longer be described as temporary. Key aspects of the latest guidance as regards residence and permanent establishments are set out below.
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On 30 December, the UK government laid regulations that will significantly reduce the type of cross-border arrangement that will need to be reported by UK intermediaries under the so-called DAC 6 rules on 31 January 2021 and in the future.
In the last year or so, we have regularly written about DAC 6 in our Tax Talks blog and in our monthly UK Tax Round Up. As a reminder, DAC 6 is the wide ranging EU regime for reporting “cross-border tax arrangements” which requires certain “intermediaries” and taxpayers to report to HMRC a wide range of transactions entered into since 25 June 2018 that met a “hallmark” set out in the implementing EU Directive. In the UK the first reports in respect of reportable cross-border tax arrangements are due to be made by 31 January 2021.
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