In-depth analysis of the issues facing our private clients, entrepreneurs and their businesses.
Technical Updates
Demergers - Capital Reduction Demerger
Companies are increasingly turning to demergers as a method of separating out various parts of a business. The decision to split off a trade or subsidiary from a company or group may be undertaken for a multitude of reasons including streamlining operations, ring-fencing liabilities, succession planning or shareholder disputes.
There are three broad routes to carrying out a demerger…
Construction Services Domestic Reverse Charge for VAT
Originally planned for October 2019, the domestic reverse charge for construction services will come in next month.
There is also an amendment to the original legislation to make it a requirement that, where businesses are to be excluded from the reverse charge (because they are either end users or intermediary suppliers), they must inform their sub-contractors in writing that they…
Economic substance requirements for companies in Crown Dependencies and other jurisdictions
New legislation has been introduced in the Crown Dependencies of Guernsey, Jersey and Isle of Man, as well as in Bahamas, Bermuda, BVI and Cayman Islands, which now ensures that certain entities based in those territories can demonstrate sufficient local economic substance. The start date varies slightly among jurisdictions, but for the Crown Dependencies the legislation is…
Corporation Tax Treatment of Goodwill and Related Assets
There are special rules governing the treatment of goodwill and other intangible assets for corporation tax purposes. When the rules were first introduced with effect from 1 April 2002 the tax treatment was intended to broadly follow the accounting treatment. This meant that where a company acquired an intangible asset, it would be able to claim a corporation tax deduction on the…
IHT - OTS second report
The Office of Tax Simplification (OTS) recently published its second report on inheritance tax. The first review was published in autumn 2018 and focussed on administration of the tax. The second review concentrates on the application of inheritance tax reliefs and other technical aspects. The government has not yet responded to the report so it is unclear if any of the…
Reforms to Off-Payroll Working – Extension to the Private Sector
Update July 2019: In the October 2018 budget it was announced that the off-payroll working rules in the public sector will be extended to the private sector from April 2020. After initial consultation, the government has listened to concerns that these changes may be onerous to implement for the smallest organisations and has decided that they will not apply to small companies as…
Capital Gains Tax Changes
HMRC have recently introduced several revisions to the capital gains tax (CGT) rules. An outline of the main changes is below.
Structures and Buildings Allowances - Publication of Draft Legislation
A new Structures and Buildings Allowance (SBA) was announced in the Autumn Budget 2018, at which time a Technical Note was published setting out in some detail what was proposed. Since then, HMRC have been in discussions with various interested parties, and as a result there have been some small changes to the proposed relief. HMRC have now published draft legislation which, subject…
Demergers - Liquidation Reconstruction under s 110 Insolvency Act 1986
Companies are increasingly turning to demergers as a method of separating out various parts of a business. The decision to split off a trade or subsidiary from a company or group may be undertaken for a multitude of reasons including streamlining operations, ring-fence liabilities, succession planning or shareholder disputes.
There are three broad routes to carrying out a…
Demergers - The Statutory Route
Businesses use demergers as a method of separating out various parts of a business. The decision to split off a trade or subsidiary from a company or group may be undertaken for a multitude of reasons including streamlining operations, asset protection, succession planning or shareholder disputes.
There are three broad routes to carrying out a demerger:
The statutory route (an…
The UK Hybrid Mismatch Rules
The hybrid mismatch rules are aimed at counteracting tax mismatches where the same item of expenditure is deductible in more than one jurisdiction or where expenditure is deductible but the corresponding income is not fully taxable (or the income is taxed at a beneficial rate or is deferred to a future period). The rules were introduced in response to the OECD’s base erosion and…
EIS and SEIS
The Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) are designed to help businesses raise finance by offering investors generous tax breaks. These schemes are particularly popular with new companies as they help attract investors.
While the tax relief for investors is extremely beneficial, ensuring that all the conditions to qualify for the relief…