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Welcome to Edwin Coe’s Bite Sized blog for May 2017.

As we await the outcome of this month’s General Election and the subsequent state opening of Parliament, this month I have focused on a couple of interesting cases. I also enclose an important update from my colleagues in our Intellectual Property department relating to the General Data Protection Regulation (GDPR).

Accelerated payment notice specifying two different payment amounts defective (First-tier Tribunal)

The First-tier Tribunal has found defective an accelerated payment notice (APN) erroneously containing two different payable amounts. The tribunal had no power to consider whether the conditions for issuing an APN had been met, or the APN itself should be set aside for invalidity, outside judicial review. However, it allowed the taxpayer’s appeal against the non-payment penalty as the lack of certainty as to the quantum due barred HMRC from levying the additional charge because that amount was the basis of the calculations. The tribunal held that HMRC could only impose a penalty if it was clear to the taxpayer what they had to do (how much they had to pay) to avoid it.

When an APN or an APN late payment penalty notice is received, it is worth confirming the validity of the APN, in particular, that it complies with the exact requirements of Chapter 3 of Part 4 of the Finance Act 2014. Case: Pitcher v HMRC [2017] UKFTT 0406 (TC) (9 May 2017)

DTT applies where jurisdictions tax different persons (First-tier Tribunal)

The First-tier Tribunal has decided that a double tax treaty (DTT) can be applied where the two relevant jurisdictions seek to tax different persons. This case considered a “round the world” scheme which used the UK/Mauritius double tax treaty to avoid capital gains tax (CGT) on gains realised by UK trustees. As the UK/Mauritius treaty, and the Organisation for Economic Co-operation and Development (OECD) Model Convention on which it was based, operated with reference to categories of income or gains rather than categories of persons liable to tax. It was still possible to benefit from treaty relief where the two jurisdictions sought to tax different persons.

This type of scheme has since been closed down by HMRC but the tribunal’s clarification of the applicability of a double tax treaty where the jurisdictions tax different persons is welcome. Case: Lee and Bunter v HMRC [2017] UKFTT 0279 (TC)

HMRC can enquire into tax calculations based on its own specifications (First-tier Tribunal)

A taxpayer employed an accountant to submit his tax returns. The accountant used commercial software which relied on technical data supplied by HMRC, which HMRC used to develop its own online tax calculators. Based on the calculation, the taxpayer’s returns showed that he was liable to capital gains tax (CGT) for those years at the lower rate rather than the higher rate.

The taxpayer argued that HMRC did not have the power to enquire into the tax return because the calculations were, effectively, its own as they were based on information supplied by HMRC. HMRC could not, therefore, attempt to reverse its own errors.

The tribunal judge decided that because HMRC had power under section 9A of the Taxes Management Act 1970 to enquire into anything contained in a taxpayer’s return, this was sufficiently broad to extend to the underlying calculations. To limit the scope of an enquiry in this way would restrict HMRC’s ability to assist taxpayers in completing their returns and might make it much more guarded about providing assistance if it was enquiring into aspects of a return that derived from information it had itself provided. Case: Scott v HMRC [2017] UKFTT 385 (TC).

GDPR – Less than one year to go…

The General Data Protection Regulation (GDPR) will come into force in the UK in just under a year’s time – on 25 May 2018. It will be the biggest reform of data protection laws for 20 years and brings with it a raft of changes and new obligations which will impact on all businesses and organisations. To find out more about it, please read the blog prepared by Edwin Coe’s Intellectual Property team.

Here’s hoping the warmer weather lasts for at least a few more months…!

Kind regards

Frank Strachan
Partner | Head of Tax
For Edwin Coe LLP
d: +44 (0)20 7691 4136 | e: frank.strachan@edwincoe.com

Edwin Coe LLP is a Limited Liability Partnership, registered in England & Wales (No.OC326366). The Firm is authorised and regulated by the Solicitors Regulation Authority. A list of members of the LLP is available for inspection at our registered office address: 2 Stone Buildings, Lincoln’s Inn, London, WC2A 3TH. “Partner” denotes a member of the LLP or an employee or consultant with the equivalent standing. This guide concerns the law in England and Wales and is intended for general guidance purposes only. It is essential to take specific legal advice before taking any action.

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