Reversal of Inverclyde
The 2020 Budget announced provisions to reverse last year’s FTT decision in Inverclyde. In that case, HMRC denied the appellant LLPs’ claims for Business Property Renovation Allowance on the basis that the LLPs did not carry on a business with a view to a profit. The LLPs argued that, if that were the case, HMRC were wrong to open enquiries into their members’ returns as the LLPs would be opaque for tax purposes, and thus the amendments removing the allowance were invalid. HMRC argued that, because the LLPs filed a partnership return, they were entitled to open an enquiry. The FTT agreed with the taxpayers.
Although the draft legislation has not yet been released, documents released alongside the budget indicate that the new provisions will reverse the Inverclyde decision retrospectively. From the date of Royal Assent of the Finance Bill 2020, HMRC will be allowed to amend LLP members’ returns to reflect its conclusion that an LLP is not trading with a view to profit. All amendments already made on this basis will also be valid.
Latest Development in Inverclyde
Following the hearing in the Upper Tribunal last month, a decision has now been issued, confirming the correct approach for enquiring into returns filed by limited liabilities partnerships who are found not to be trading with a view to profit.
HMRC Guidance on COVID-19 Part 2: Statutory Residence Test
The Statutory Residence Test provides that an individual is considered to have spent a day in the UK if they are in the UK at the end of the day (midnight) subject to several exceptions, one of which is exceptional circumstances. The exception applies for 60 days only in any given tax year. During the COVID-19 pandemic, HMRC have provided example circumstances which are considered exceptional.
HMRC Guidance on COVID-19 Part 1: Reasonable Excuse
In light of the current coronavirus pandemic, HMRC has released new guidance on taxpayer's failure to meet obligations. It has also set out the extent to which it will allow those seeking a review of, or appealing, an HMRC decision more time to do so.
COVID-19: European Commission’s Big Plan
The coronavirus pandemic has had a great impact on countries across the world. With such a wide-ranging knock to the global economy, the European Commission released a communication on 27 May 2020, setting its plan for recovery in Europe.
Digital Service Tax
For some years now, the OECD have been working towards an international approach to the taxation of digital businesses. Be that as it may, delay in the international implementation of this tax has resulted in many countries now enacting their own tax laws on digital services. The United Kingdom is one such country.