Offshore Structures and Onward Gifts

Author: Helen McGhee, - 24 Aug 2022
Tax Avoidance | Tax Evasion | Tax

The so-called “onward gift” tax anti-avoidance rules were introduced by the Finance Act 2018 to complement the changes brought in the previous year aimed at restricting the UK tax privileges afforded to non-UK domiciled individuals. The rules were designed to close some perceived loopholes in relation to the taxation of non-UK resident structures (including but not limited to non-UK trusts). With effect from 6 April 2018, it would no longer be possible for an individual to receive a gift without questioning its providence, particularly where family trusts are involved.    

The rules were designed to prevent non-UK structures from using non-chargeable beneficiaries as conduits through which to pass payments in order to avoid tax charges. Gone are the days of “washing out” any trust gains that could be matched to offshore income or gains by prefacing a payment to a UK-resident taxable beneficiary with a non-taxable primary payment to a non-UK resident beneficiary.  

“It is notoriously challenging to prove a negative (especially to HMRC) and even more tricky where the taxpayer must speak to someone’s intention other than their own.”

Note that the new rules will apply where funds are received from non-UK resident structures before 6 April 2018 to the extent that they are subsequently gifted after that date.

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Increased Investment in Personal Tax Compliance in the UK

Author: Helen McGhee, - 24 Aug 2022
Tax

Changes in public opinion, advances in technology and increased international fiscal co-operation have made global personal tax compliance initiatives pop up in abundance in recent years. In addition, the Russian invasion of Ukraine and the corresponding economic fallout have prompted governments to increase transparency in relation to investments by wealthy foreign individuals in their countries. 

The UK’s HMRC is one of the most sophisticated tax collection authorities in the world and the department is making significant investments in technology in the field of compliance work.

It should therefore be well placed to take advantage of new international efforts to increase tax compliance, particularly against the backdrop of the already extensive network of bilateral tax treaties in the UK, and not forgetting that the UK was a founding member of the OECD’s Joint International Taskforce on Shared Intelligence and Collaboration (JITSIC) forum.

This article discusses the main developments in support of the increased focus on international transparency and tax compliance in the UK. There are other international fiscal initiatives, particularly in the field of corporate taxation, but such initiatives are beyond the scope of this article. 

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Case note: Lynton Exports (Alsager) Ltd v Revenue and Customs Commissioners [2022] UKFTT 00224 (TC)

Author: Julia Glukhikh, - 01 Aug 2022
Corporation Tax | Tax

As HMRC continue to apply the Kittel principle to increasing numbers of industries and businesses, taxpayers need to be vigilant about evidential requirements that HMRC must fulfil in order to discharge their burden of proof. Read JHA’s latest insight into the First-tier Tribunal’s decision in Lynton Exports (Alsager) Ltd v Revenue and Customs Commissioners [2022] UKFTT 00224 (TC).

If you require any further information about the Kittel, Mecsek, and Ablessio principles, or any other allegations by HMRC of fraud or fraudulent abuse, please contact Iain MacWhannell (imw@jha.com).

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Preparing for the Possibility of a Domicile Enquiry

Author: Helen McGhee, - 01 Aug 2022
HMRC | Non-Doms | Non-Dom Status | Tax Evasion | Tax

Helen McGhee, a director and chartered tax advisor at Joseph Hague Aaronson, explores who might be vulnerable to an HMRC enquiry on domicile and how best to deal with such enquiries.

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The Kittel Principle - Sweet Sixteen

Author: JHA - 24 Jun 2022
HMRC | Tax

The following is an article written by David Bedenham about HMRC’s wide-ranging application of the ‘Kittel principle’. The current focus appears to very much be on the labour supply industry and the allegation of ‘Mini Umbrella Company Fraud’ (or ‘MUC Fraud’).  This article highlights the need for taxpayers to get specialist advice at an early stage when faced with a Kittel decision. If you have any queries about Kittel-related issues or similar denials of input VAT or assessments to VAT, please contact Iain MacWhannell (imw@jha.com).

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What is domicile and why does it matter for tax?

Author: Tom O’Reilly, - 13 May 2022
HMRC | Tax | Private Client

A quick review of the fundamental principle of domicile, why it matters for tax, and what the current political landscape has in store.

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Tax note: Financial Institution Notices (FIN)

Author: Nahuel Acevedo-Peña, - 10 Mar 2022
HMRC | Tax Transparency

Understanding paragraph 4A of Schedule 36 to the Finance Act (“FA”)

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SHORT CASE REPORT FTT DECISION – EXCISE DUTY - Cantina Levorato SRL v. HMRC [2021] UKFTT 461 (TC)

Author: Nahuel Acevedo-Peña, - 10 Mar 2022
HMRC | Tax Litigation Cases | Tax Litigation

Short Case Report on FTT Decision Excise Duty

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Fast Track for Register of Overseas Entities Owning UK Property

Author: Helen McGhee, - 08 Mar 2022

The invasion of Ukraine has prompted the UK government to speedily publish the draft legislation for the Economic Crime (Transparency and Enforcement) Bill 2022 which requires foreign entities that acquire UK property (freehold interests or leases granted for more than 7 years) to register with Companies House and declare details of their beneficial ownership.

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Global Minimum Tax on Corporations: OECD GloBE Model Rules and their implementation in the UK

Author: Nahuel Acevedo-Peña, - 22 Feb 2022

This article is a follow-up to our two previous articles of 20 August 2021 and 7 December 2021.

On 8 October 2021, the OECD/G20 published a statement confirming that 136 jurisdictions1 had agreed to a two-pillar solution to address the tax challenges that arise from the digitalisation of the economy and setting out an implementation plan.

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