Important HMRC Guidance Updates
It can be a challenge for tax and commercial law professionals to keep up with updates and additions to tax manuals and guidance. Here, we highlight notable recent updates issued by HM Revenue and Customs (HMRC).
One of the amendments follows the scrapping of Multiple Dwelling Relief (MDR). With a new Labour government now in place, we can expect the tax landscape to undergo change – and further associated amendments to HMRC’s guidance.
MDR
Effectively a relief from stamp duty land tax (SDLT), MDR was available (in England and Northern Ireland) from 2011 for purchasers of more than one residential property if the transaction was a single or a linked transaction.
It has now been abolished as of 1 June, but with exceptions (including transactions which were substantially performed before that date). HMRC guidance on paying higher SDLT rates has been updated to reflect the withdrawal of MDR.
Mini umbrella company fraud
HMRC has cottoned onto mini umbrella company fraud which, though changing often as criminals try to stay ahead, is a model often relying on hiring temporary workers to effect the fraud.
In the recent case of Elphysic Ltd & Ors [2024] TC 09126, the First Tier Tax tribunal ruled that mini umbrella company arrangements were not permitted to account for VAT under the flat rate scheme and not entitled to the employment allowance.
HMRC has now updated information about what mini umbrella company fraud is, and a link to the Elphysic decision. It also encourages businesses to undertake checks and report suspected fraud.
Capital Allowances Manual
A couple of amendments of note.
First, HMRC’s internal Capital Allowances Manual (sCA23122) has been updated following the introduction of new rules on 21 May 2024. The rules postpone the sunset dates for special tax sites in freeports in England to 30 September 2031 (30 September 2034 for all other special tax sites). It includes that qualifying expenditure on plant and machinery must be incurred before the applicable sunset date in order to be eligible for an enhanced capital allowance.
Second, the section relating to structures and buildings allowance for parts of a building has been updated to reflect the change in rate (3% as from April 2020).
Pillar 2 top-up tax requirements
New guidance on the Pillar 2 top-up tax registration requirement has been published. Any entity with a UK location, and which has annual revenues of at least €750m in at least two of the previous four accounting periods, must use the HMRC service to register. Registration must
take place within 6 months of the end of the first accounting period that started on or after 31 December 2023.
If you would like us to cover an issue in the next NGM Tax Law Newsletter, we would be delighted to hear from you.