Tax update - August 2019

In this month’s update we report on (1) HMRC’s summary of responses to its ‘protecting your taxes in insolvency’ consultation; (2) HMRC’s policy paper on the misuse of company insolvencies; and (3) HMRC’s new guidance on loan relationships and derivatives regime anti-avoidance rules.

We also comment on three recent cases relating to (1) costs awarded against HMRC due to its unreasonable conduct; (2) procedural unfairness by the FTT; and (3) the quashing of follower and accelerated payment notices in judicial review proceedings.

News items

HMRC publishes summary of responses to its “protecting your taxes in insolvency” consultation

On 11 July 2019, HMRC published its summary of responses to its “protecting your taxes in insolvency” consultation.  Read more

HMRC publishes policy paper on the misuse of company insolvencies

On 11 July 2019, HMRC published a policy paper discussing measures which are aimed at those taxpayers who “unfairly seek to reduce their tax bill by misusing the insolvency of companies”. This will be achieved by making directors and other persons connected to those companies jointly and severally liable for the avoidance, evasion or “phoenixism” debts of the corporate entity.  Read more

HMRC guidance on loan relationships and derivatives regime anti-avoidance rules

Case reports

Mr E – HMRC’s unreasonable conduct leads to costs award against it

In Mr E v HMRC [2018] UKFTT 771 (TC), the First-tier Tribunal (FTT) has held that HMRC acted unreasonably in not withdrawing an information notice earlier than it did and awarded the taxpayer his costs.  Read more

Ritchie – FTT guilty of procedural unfairness

In Ritchie v HMRC [2019] UKUT 007 (TCC), the Upper Tribunal (UT) has held that the FTT erred in finding that a loss of tax had been brought about by carelessness on the part of the taxpayers’ professional advisers because, amongst other things, the carelessness of the advisers had not been adequately pleaded by HMRC and had not been put to any of the witnesses in cross-examination.  Read more

Haworth – Court of Appeal confirms HMRC misdirected itself and quashes follower and accelerated payment notices

The recent judgment of the Court of Appeal in R (on the application of Haworth) v HMRC [2019] EWCA Civ 747, is the first successful judicial review challenge against follower and accelerated payment notices. The decision throws into question the way in which the relevant statutory provisions, contained in Finance Act 2014 (FA 2014), relating to follower and accelerated payment notices have been interpreted and operated by HMRC and as a consequence many other notices may have also been issued unlawfully by HMRC.  Read more