Technical Updates

Technical updates

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In-depth analysis of the issues facing our private clients, entrepreneurs and their businesses.

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Community Interest Companies (CICs)

A CIC is a company designed for social enterprises which aim to use their profits and assets primarily for the benefit of the community or to trade for a social purpose. They are not strictly 'not for profit', and CICs can, and do, deliver returns to investors. A CIC may be limited by shares, but it is more usual for them to be limited by guarantee. It is even possible for a CIC…
Charity 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…
Business taxes Technical updates

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…
Business taxes Property VAT Technical updates

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…
Business taxes Compliance Technical updates

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…
Business taxes Technical updates

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…
Business taxes Inheritance tax Property Trusts & Estates Technical updates

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…
Business taxes Compliance Personal taxes Technical updates

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.
Personal taxes Property Technical updates

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…
Business taxes Property Technical updates

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…
Business taxes Technical updates

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…
Business taxes Technical updates

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…
Business taxes Technical updates