Tax Briefing February 2020


Despite the late and sudden change of Chancellor, the Budget announcements will still be made on 11 March and it has now been announced that the Finance Bill will be published on 19 March.

It is also now known that despite calls for a postponement the roll-out of the off-payroll rules to the private sector will take place as originally planned on 6 April 2020. The various HMRC guidance notes can be found here.

Here is a selection of other tax news items from February …

Deliberate failures

The First-Tier Tribunal decision in Cliff [2019] UKFTT 0564 (TC) is, although not binding, causing some concern since it seems to suggest that a taxpayer can only be guilty of ‘careless’ behaviour in limited cases. Most conduct resulting in an incorrect return is ‘deliberate’ and therefore subject to a much harsher penalty regime.

The Chartered Institute of Taxation has made Budget representations and asked for some clarity in the definition of deliberate behaviour for tax purposes. A copy of the representations can be found here.

The Court of Appeal decision in Tooth [2019] EWCA Civ 826, which also examined the meaning of deliberate, has yet to be heard by the Supreme Court.

Land and Buildings Transaction Tax

A new 2% higher rate on chargeable consideration over £2m consisting of rent was introduced with effect from 7 February. It does not apply to transactions where the contract was entered into before 6 February.

Corporation tax reliefs

 HMRC has issued guidance on a number of reliefs connected to culture and the arts as follows:

                Animation tax relief

                Children’s television tax relief

                Film tax relief

                High-end television tax relief

                Museums and galleries exhibition tax relief

                Orchestra tax relief

                Theatre tax relief

                Video games tax relief

Company status

 HMRC have updated their guidance on whether a company is active or dormant for corporation tax purposes. The advice also extends to clubs and other unincorporated organisations.

The guidance contains a warning that the definitions adopted for corporation tax purposes do not necessarily match those used in various financial reporting standards.

The guidance can be found here.

Capital gains tax for non-residents

HMRC’s revised guidance is a useful summary of the changing legislation over the last few years together with an on-screen tool for calculating capital gains tax liabilities.


Assem Allam [2020] UKFTT 0026 (TC) – Disposal of shares

This case examines a number of aspects relating to a disposal of shares. On the subject of entrepreneurs’ relief, the Tribunal took the view that HMRC’s preferred ‘20% test’ for determining whether non-trading activity is substantial is not particularly helpful. The case also examines the income tax avoidance motive test in the transactions in securities legislation. The Tribunal followed the precedent that the mere fact there exists another method of undertaking a transaction which gives a different tax result is not conclusive evidence of the presence of an income tax avoidance motive.

Assem Allam

Walewski [2020] UKFTT 0058 (TC) – Mixed partnerships

This case includes a useful examination of how the relatively new mixed-partnerships anti-avoidance legislation is to be applied in certain circumstances.


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