Pump Court Tax Chat

David Yates KC and Sadiya Choudhury KC take a look a some of the latest employment tax cases and recent changes to employment tax legislation.

Umbrella companies

2:01 Mainpay: Mainpay was an umbrella company providing the services of various employees whose assignments were sourced by an employment agency. The employment point in the case was the nature of the "overarching contract" between Mainpay and the workers, and specifically whether this allowed Mainpay to reimburse travel and subsidence expenses without accounting for income tax and NIC. Consideration of the Readymix Concrete test. Could you argue a "single discontinuous working employment relationship"? Legislation has now made arguing for overarching contracts very difficult (s339A ITPA). Other aspects of this case are discussed in the most recent Tax Litigation Update podcast.

9:20 PPS Umbrella and VAT mini-umbrella fraud category: Elphysic being the lead case which is heading for the Supreme Court. However new legislation is coming in April 2026 which makes umbrella companies jointly and severally liable for NICs. The government is also reviewing the operation of umbrella companies more widely.

SARS

10:39 Saunders: stock appreciation rights (SARS) under a long term incentive plan. NB this case is currently on appeal. When an employee is promised something (like a contractual right) - is it the contractual right which is their earnings or is it the payment made later under it? Does Abbott v Philbin still hold good? Do SARS have a value in their own right? Does the employee derive realistic immediate value?

IR35 legislation

21:51 Bryan Robson Ltd: payments for acting as an ambassador for Manchester United. Was it an employment contract under the hypothetical employment test? Whether all or part of the consideration was attributable to the contract allowing exploitation of image rights and, if so, was this outside IR35? Case is on its way to the UT.

27:50 New offset mechanism in the tax legislation to allow payments to be offset against PAYE liabilities. Will this mean a decrease in IR35 cases?

Payments in lieu of notice

28:53 Rawlinson: was the payment in lieu of notice (PILON) (the employee was disabled due to cancer surgery) subject to income tax as earnings? Guidance on operation of the exception of s401/406 ITPA. Absence of express language as to the purpose of a PILON not necessarily fatal but leads to tax uncertainty.

Salary sacrifice schemes

35:43 Best Connection: the company set up a travel payment scheme (BSS) linked to a salary sacrifice scheme.

38:20 Salary sacrifice legislation under ITPA: the new rules mean that salary sacrifice schemes are now brought within the benefits legislation with some exceptions (eg electric cars, pensions, bicycles). However, contributions about £2k will be subject to NICs from April 2029. Whilst Best Connection predates all this legislation, it is still helpful on whether something is actually a salary sacrifice scheme. There is draft legislation - National Insurance Contributions Employer Pensions Contributions Bill - and further guidance promised.

Agency workers legislation

41:14 Tyler Security: were the dog handling services providing "personal services"? The supervision, direction and control "SDC" test.

Citations

Legislation

ss 338 and 339A Income Tax (Earnings & Pensions) Act 2003 (ITEPA)

s16 ITEPA

Chapter 5, part 7 ITEPA

ss49 - 61 ITEPA (IR 35)

Schedule 1AB ITEPA

s62 ITEPA

s406 ITEPA

s65 ITEPA

s69A and 69B ITEPA

National Insurance Contributions (Employer Pensions Contributions Bill

ss44 - 47 ITEPA

Chapters 7 and 10 Part 2 ITEPA

Cases

Mainpay Ltd v HMRC [2025] EWCA Civ 1290

Exchequer Solutions Ltd v HMRC [2024] UKUT 25 (TCC)

Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2 QB 497

HMRC v Payroll & Pension Services (PPS Umbrella Company) Ltd [2024] EWCA Civ 995

Elphysic Ltd v HMRC [2025] UKUT 236 (TCC)

Saunders v HMRC [2025] UKUT 374 (TCC)

Abbott v Philbin [1961] AC 352

Bridges v Hewitt [1957] 1 WLR 674 (also known as Bridges v Bearsley)

Bryan Robson Ltd v HMRC [2025] UKFTT 56 (TC)

Basic Broadcasting Ltd v HMRC [2024] UKUT 165 (TCC)

HMRC v S&L Barnes Ltd [2024] UKUT 262 (TCC)

HMRC v Professional Games Match Officials Ltd [2024] UKSC 29

Atholl House Productions Ltd v HMRC [2022] EWCA Civ 501

Kickabout Productions Ltd v HMRC [2022] EWCA Civ 502.

Rawlinson v HMRC [2026] UKFTT 45 (TC)

HMRC v Tottenham Hotspur Ltd [2017] UKUT 453 (TCC)

Hasted v Horner [1995] STC 766

The Best Connection Group Ltd v HMRC [2024] UKFTT 1103 (TC)

Tyler Security Ltd v HMRC [2025] UKFTT 1250 (TC)

Producer: Peter Shevlin

A pod60 production for Pump Court Tax Chambers

Ben Elliott, Quinlan Windle and Sam Glover look at recent developments in litigation focusing on procedural issues such as late appeals (Medpro), burden of proof (Sintra), the jurisdiction of the tribunal, disclosure and duty of candour, use of AI in writing judgments, assessments and penalties (eg Mainpay).

2:07 Court of Appeal judgment in Medpro (late appeals and in particular the Martland approach) – The UT can give guidance and the correct guidance in relation to late appeals is theMartland approach. Higher courts can only interfere with that guidance if there has been an error of law. Has the CA widened the grounds for appeal? Some practical points arising from the decision.

20:50 Sintra - Court of Appeal judgment concerning burden of proof in penalty cases.

25:33 Jurisdiction of tribunal to consider public law points – in particular the recent decision in Morrisons. How to protect the taxpayer's position with parallel judicial review proceedings and statutory appeals.

38:30 Use of AI in writing judgments – How are the courts using AI?

40:45 Disclosure and the duty of candour – Do HMRC have a duty of candour before the FTT? Is it the same duty as in judicial review cases? Is it only HMRC who have a duty of candour in FTT cases?

43:40 Assessments, penalties and causation - Discussion of recent cases and principles laid down in Mainpay, Delphi and Boston Consulting Group.

Citations

Cases

Medpro Healthcare Ltd & Ruppai v HMRC [2026] EWCA Civ 14, [2026] STC 253

Martland v HMRC [2018] UKUT 178 (TCC)

Mitchell v News Group Newspapers [2013] EWCA Civ 1537, [2014] 2 All ER 430

Denton v TH White Ltd [2014] EWCA Civ 906, [2015] 1 All ER 880

HMRC v McCarthy & Stone [2014] UKUT 196 (TCC), [2014] STC 973

BPP Holdings Ltd v HMRC [2017] UKSC 55, [2017] 4 All ER 756

Perinpanathan v City of Westminster Magistrates Court [2010] EWCA Civ 40, [2010] 1 WLR 1508

Competition & Market Authority v Flynn Pharma Ltd [2022] UKSC 14, [2023] 1 All ER 97

Price and others v HMRC [2015] UKUT 164 (TCC)

Carbon Six Engineering Ltd v HMRC [2026] UKFTT 177 (TC)

HMRC v Sintra Global [2025] EWCA Civ 1661

Henryk Zeman SP Zoo v HMRC [2021] UKUT 182 (TCC), [2021] STC 1706

Treasures of Brazil v HMRC [2024] UKFTT 929

Caredav Ltd v HMRC [2023] UKUT 179 (TCC)

Chelsea Cloisters v HMRC [2025] UKFTT 205 (TC), [2025] SFTD 1105

Morrison Supermarkets v HMRC [2025] UKFTT 1542 (TC)

R (on the application of Archer) v HMRC [2017] EWCA Civ 1962, [2018] STC 38

R (on the application of Weis) v HMRC [2025] EWHC 2479 (Admin), [2025] STC 1659

Cobalt Data Centre 2 LLP v HMRC [2019] UKUT 342 (TCC), [2020] STC 23

Evans v HMRC [2025] UKFTT 01112 (TC)

Jordi Carulla Font v HMRC [2025] EWHC 3057 (Admin), [2025] STC 1935

Nottingham Forest Football Club v HMRC [2024] UKUT 145, [2024] STC 1105

Delphi Derivatives v HMRC [2026] UKUT 21 (TCC), [2026] STC 292

O'Neil & Ors v HMRC [2026] UKUT 13 (TCC), [2026] STC 199

Boston Consulting Group v HMRC [2026] UKUT 25 (TCC), [2026] STC 105

Lands Luo Limited v HMRC [2025] UKFTT 1207 (TC)

Jeneruhl Trading Ltd & Another v HMRC [2024] UKFTT 735 (TC)

Legislation

CPR rule 3.9

Rule 28 procedure

s29 Taxes Management Act

s36 Taxes Management Act

Producer: Peter Shevlin

A pod60 production for Pump Court Tax Chambers

Laura Poots KC and Thomas Chacko consider classification and characterisation in VAT cases.

2:00 What is meant by classification and characterisation: when you have identified you have a single supply or a set of multiple supplies, what is that supply? And is the position completely clear following Gray & Farrar?

2:50 The first step is identification of supply - to decide if you have a single or multiple supply - and then one looks at classification. Explanation of the two bases on which a single supply might be identified.

4:56 Is classification the final word on how the supply will be taxed?

Case law and what are the tests?

7:26 Card Protection Plan (CPP) Supplies – principal-ancillary supplies and how they are classified.

8:12 Levob Supplies - In classifying these, different courts have looked at "overarching" or "economic reality" test and the "predominant element" test.

10:45 Gray & Farrar. Court of Appeal has now confirmed that there is a hierarchy of three tests (1) predominant element (2) principal-ancillary (3) overarching supply.

12:00 Predominance test: This is the primary test. Look at economic purpose and the typical customer (qualitative as well as quantitative).

13:55 Principal-ancillary test: a sense check on predominance, but also useful in working out the number of elements.

15:41 Overarching test: can assist in deciding predominance.

17:00 In applying these tests, how do you identify the elements of the supply?

How does this all work in practice?

19:56 HMRC don't seem to view Gray & Farrar as settling the test in every case. What are HMRC's arguments and what are the problems with them?

21:05 HMRC argument 1: Individual elements cannot be singled out.

22:06 HMRC argument 2: subset of Levob supplies where no conceptual room for predominance test. HMRC's reliance on Blackrock and Deutsche Bank.

29:19 A practical example - Story Terrace. Court takes a lot of notice of contractual documentation and marketing descriptions. Potential relevance of online reviews. Demonstration of the importance of considering identification before classification.

CITATIONS

Blackrock Investment Management (UK) Ltd v HMRC [2020] STC 1445

Card Protection Plan Ltd v Customs and Excise Commissioners (Case C-349/96) [1999] STC 270

Finanzamt Frankfurt am Main V-Hochst v Deutsche Bank AG (C-44/11) [2012] STC 1951

HMRC v Gray & Farrar International LLP [2023] STC 327

Levob Verzekeringen BV and another v Staatssecretaris van Financien (C-41/04) [2006] STC 766

Město Žamberk v Finanční ředitelství v Hradci Králové (C-18/12) [2014] STC 1703

Spectrum Community Health CIC v HMRC [2024] STC 1124

Story Terrace v HMRC [2025] UKFTT 1554 (TC)

Target Group Ltd v HMRC [2018] UKFTT 226

Talacre Beach Caravan Sales Ltd v Customs and Excise Commissioners (Case C-251/05) [2006] STC 1671

European Commission v France (Case C-94/09) [2012] STC 573

EC v Grand Duchy of Luxembourg (Case C-274/15) [2017] ECR

Producer: Peter Shevlin

A pod60 production for Pump Court Tax Chambers

David Ewart KC and Laura Ruxandu look at judicial review in relation to tax cases from a procedural as well as substantive perspective.

1. when you can bring judicial review in a tax case.
2. what to do if you have alternative remedies.
3. the jurisdiction of the administrative court.
4. procedure for judicial review.

1: 13 The three broad areas in which you can bring judicial review in tax cases.

3:19 Area 1: Extra-statutory rulings - where HMRC resile on an earlier representation personal to the taxpayer. These claims cannot be brought in the tax tribunal. Whilst most of the case law is won by the HMRC, equally there are a lot of cases in which the HMRC accept the taxpayer's challenge.

10:49 Area 2: Where the tax payer has read and relied on a general statement in a published document/statement.

20:53 Area 3: Procedural errors- breach of natural justice, applications for disclosure.

26:42 Judicial review should be viewed as a last resort. It is a residual remedy and is not available if alternative remedies are available.

26:56 The jurisdiction of the administrative court to hear public law arguments such as judicial review.

36:00 Procedure for judicial review. You need to apply for permission. Differences to the Tribunal eg time limits, pre-action protocol. Very important to get early professional advice and evidence to cover the application as well as judicial review (if you get permission).

44:52 Increasing role of Upper Tribunal.

47:41 Difference of appeals to appeals in the Tribunal.

48:00 Strategic importance of threatening judicial review.

Cases

R (Hawarth) v HMRC [2021] UKSC 25

R (Locke) v HMRC [2019] EWCA Civ 1909

R (Refinitiv UK Holdings Ltd) & Anor v HMRC [2023] UKUT 00257 (TCC)

R (Airline Placement Ltd) v HMRC [2023] EWHC 1191 (Admin)

Murphy & Linnett v HMRC [2023] EWCA Civ 497

R (Aozora GMAC Investment Ltd) v HMRC [2019] EWCA Civ 1643

R (Rettig Heating Group Ltd) v HMRC [2025] UKUT 143 (TCC)

R (Archer) v HMRC [2017] EWHC 296 (Admin)

Zeman v HMRC [2021] UKUT 182 (TCC)

Harrison v HMRC [2023] UKUT 00038

Caerdav Ltd v HMRC [2023] UKUT 00179 (TCC)

Reed Employment v HMRC [2015] EWCA Civ 805

MCM v HMRC

Glencore v HMRC [2017] EWCA Civ 1716

Legislation

s50 Taxes Management Act

Producer: Peter Shevlin

A pod60 production for Pump Court Tax Chambers

Legislation

1. Part III and Schedule 5 of the Finance Act 1996
2. Section 42 and Schedule 12 of the Finance Act 2018
3. EU Landfill Directive (1999/31/EC)
4. Consultation on Reform of Landfill Tax in England and Northern Ireland (April 2025)
5. Paris Agreement 2015
6. s1 Climate Change Act 2008Renewed Agenda for European Union – United Kingdom cooperation common understanding (May 2025)
7. Environment Act 2021
8. The Environmental Targets (Residual Waste) (England) Regulations 2023, regulation 2

Cases

1. Waste Recycling Group Ltd v HMRC [2008] EWCA Civ 849; [2009] STC 200
2. Patersons of Greenoakhill Ltd v HMRC [2016] EWCA Civ 1250; [2017] 1 WLR 1210; [2017] STC 225
3. Devon Waste Management Ltd v HMRC [2021] EWCA Civ 584; [2021] 4 WLR 89; [2021] STC 990

• Joshua Stevens | Pump Court Tax Chambers
• Zizhen Yang | Pump Court Tax Chambers

Producer: Peter Shevlin

A pod60 production for Pump Court Tax Chambers

Thomas Chacko and Quinlan Windle discuss the options for tax breaks in relation to spending on R&D:

• outline of scheme and changes made in 2024
• what R&D means
• can you claim when R&D is contracted out
• practical points about how to deal with enquiries bearing in mind recent case law

1:25 outline of the scheme pre the Finance Act 2024 - basic deduction and 2 further possible schemes (relief for small and medium enterprises + R&D credit).

2:54 effect of Finance Act 2024

3:23 what is R&D? A common question as well as major issue in many of the cases.

8:03 the effect of HMRC now taking very robust stance on R&D tax credit claims and requiring cases to pass a very high threshold. Issues with highly technical areas eg software. Tax payers must be able to explain highly technical projects to HMRC/tribunal in a way that enables them to understand why the work merits the tax credit.

18:40 restrictions on qualifying expenditure in recent case law and following the Finance Act 2024.

37:09 practical problems in enquiries and litigation. Also the use of ADR.

Citations

Legislation and guidelines

Corporation Tax Act 2009

Finance Act 2024

BEIS Guidelines - latest update March 2023 (originally the DTI Guidelines)

HMRC Guidance - CIRD84250

HMRC CIRD161000

Case law

Hadee Engineering Co Ltd v Revenue & Customs [2020] UKFTT 497 (TC)

BE Studios v Smith & Williamson Ltd [2005] EWHC 1506

Flame Tree Publishing v HMRC [2024] UKFTT 349 (TC)

Get Onbord v HMRC [2024] UKFTT 617 (TCC)

Quinn (London) Ltd v HMRC [2021] UKFTT 437 (TC)

Collins Construction Ltd (TC09332) - 21 October 2024

Stage One Creative Services [2024] UKFTT 1059 (TC)

Rupert Baldry KC and Sadiya Choudhury KC examine how the customs and excise duty regime is operating post-Brexit. This includes a brief overview of the pre-Brexit regime, the main legislative changes since Brexit, the relationship between the old and new regimes, some recent cases and future developments in this area.

1:15 History of customs and excise duties 

3:31 Tariffs - what are they? Why do we have them? Who pays them? Any restrictions on them?

6:45 Role of World Trade Organisation in harmonising tariffs. Role of Free Trade Agreements (FTAs) and customs unions.

8:25 Framework of customs law pre Brexit - a customs union in which the EU negotiated FTAs and there was no need for a domestic UK customs code except in relation to remedies and enforcement.

11:23 Excise duty regime pre Brexit.

12:55 Pre Brexit, dualistic interpretation to legislation ie look at Act then underlying directive it sought to implement.

15:13 Legislative changes to customs post Brexit principally (a) Taxation Cross-border Trade Act 2018 (TCTA) and (b) new FTAs.

16:21 TCTA brings in a new customs duty known as import duty. How this operates is set out in O'Neill Wet Suits. The TCTA recognises and allows for FTAs to be agreed.

20:07 3 types of FTA now (a) Continuity Agreements (b) new FTAs (c) Trade & Cooperation Agreement 2020 with EU.

22:40 Status of FTAs in UK law. Interaction of article 5 TCTA and s29 European Union Future Relations Act 2020 + Lipton v BA City Flyer.

29:39 Current regime for customs - FTAs but no customs unions. If there is no FTA/relief/tariff suspension (eg Developing Countries Trading Scheme) then UK global tariff applies.

31:17 Practical consequences of new customs regime for all parts of UK other than Northern Ireland. Less drastic consequences for excise duties.

32:44 Explanation of the rules of origin.

35:20 The relationship between the new domestic customs regime and EU law. How are accrued EU law rights treated? And what of events after 31.12.20? What is the status of previous case law?  

49:43 Excise duty - legislative interpretation now has a carve out like VAT (s28 Finance Act 2024) and will refer back to the old law. How are the courts going to view previous case law e.g. in relation to “holding” goods?

 55:07 How do the new rules tie in with the appeal framework? Very few changes other than that the courts no longer have to apply EU principles. Changes from the previous rules are causing complications eg the interaction of appeals and remission applications. 

1:01:42 New regime is made up of a very short Act and a lot of secondary legislation which allows HMRC to publish notices. This makes it difficult to see an overarching policy or find the policy that applies to a particular case.

1:03:44 Discussion of some recent cases.

1:06:36 What of the future? New case law will take time to build up, there are developments in the EU which will affect the UK and the carbon cross-border adjustment mechanism is to be introduced in 2027.

Citations and legislation

UK legislation 

• Section 2, European Communities Act 1972
• Customs and Excise Management Act 1979
• Alcoholic Liquor Duties Act 1979
• Hydrocarbon Oil Duties Act 1979
• Tobacco Products Duty Act 1979
• Chapter II, Finance Act 1994
• The Excise Goods (Holding, Movement and REDS) Regulations 1992 (SI 1992/3135)
• The Excise Goods (Holding, Movement and Duty Point) Regulations 2010 (SI 2010/593)
• Taxation (Cross-border Trade) Act 2018
• European Union (Withdrawal) Act 2018
• Sections 52 and 56(4), The Customs (Import Duty) (EU Exit) Regulations 2018
• The Customs Tariff (Preferential Trade Arrangements) (EU Exit) Regulations 2020
• Section 29, European Union (Future Relationship) Act 2020
• Part 2, Finance (No 2) Act 2023
• The Finance Act 2016, Section 126 (Appointed Day), the Taxation (Cross-border Trade) Act 2018 (Appointed Day No. 8, Transition and Saving Provisions) and the Taxation (Post-transition Period) Act 2020 (Appointed Day No. 1) (EU Exit) Regulations 2020 (SI 2020/1642)
• Retained EU Law (Revocation and Reform) Act 2023
• Section 28, Finance Act 2024

EU Legislation

• Treaty on European Union / Maastricht Treaty
• Treaty on the Functioning of the European Union
• Council Regulation (EEC) No 2913/92 (the Community Customs Code)
• Commission Regulation (EEC) No 2454/93
• Council Directive 1992/12/EEC
• Council Directive 2008/118/EC
• Regulation (EU) No 952/2013 (the Union Customs Code)
• Commission Delegated Regulation (EU) 2015/2446
• Commission Implementing Regulation (EU) 2015/2447

EU/UK agreements

• The EU-UK Withdrawal Agreement
• The EU-UK Trade and Co-operation Agreement
• The Northern Ireland Protocol and Windsor Framework

Cases 

• Case C-279/19 HMRC v WR (reference fromHMRC v Perfect [2019] EWCA Civ 465)
• Lipton & Anor v BA City Flyer Ltd [2021] EWCA Civ 454, [2021] WLR 2545
• HMRC v Perfect (No 2) [2022] EWCA Civ 330, [2022] 1 WLR 3180
• Dawson’s (Wales) Ltd v HMRC [2023] EWCA Civ 332, [2023] 4 WLR 35
• Hartleb T/A Hartleb Transport v HMRC [2024] UKUT 34 (TCC)
• Cozy Pet Ltd v HMRC [2024] UKUT 96 (TCC)
• Kent Couriers Ltd v HMRC [2024] UKFTT 145 (TC)
• Bunting v HMRC [2024] UKFTT 431 (TC)
• Electric Mobility Euro Ltd v HMRC [2024] UKFTT 590 (TC)
• Lipton & Anor v BA Cityflyer Ltd [2024] UKSC 24, [2024] 3 WLR 474
• O’Neill Wetsuits Ltd v HMRC [2024] UKFTT 1071 (TC)

Other materials 

• Practice Statement (Judicial Precedent) [1966] 1 WLR 1234
• WTO rules: https://www.wto.org/english/thewto_e/whatis_e/tif_e/agrm1_e.htm
• Lancaster House speech: https://www.gov.uk/government/speeches/the-governments-negotiating-objectives-for-exiting-the-eu-pm-speech
• Free Trade Agreements: https://www.gov.uk/government/collections/the-uks-trade-agreements
• UK Global Tariff: https://www.gov.uk/trade-tariffand https://data.api.trade.gov.uk/v1/datasets/uk-tariff-2021-01-01/versions/v4.0.956/metadata?format=html
• EU customs reform: https://taxation-customs.ec.europa.eu/customs-4/eu-customs-reform_en
• Introduction of a UK Carbon Border Adjustment Mechanism from January 2027:https://www.gov.uk/government/publications/factsheet-carbon-border-adjustment-mechanism-cbam/factsheet-carbon-border-adjustment-mechanism
• Tax Journal article by Joshua Stevens:https://www.taxjournal.com/articles/the-cbam-trilemma

Jeremy Woolf and Barbara Belgrano look at how Brexit affects the UK tax position and consider some of the issues which will be ongoing, at least in the near future.

(3:08) Where we are today: you have to consider which period your case falls within. There are three periods to consider: (1) 2018 up to IP Completion Day being 31st December 2020 (2) 1 January 2021 - 31st December 2023 (3) 1st January 2024 onwards.

The first period: up to IP Completion Day on 31st December 2020

• (4:42) The UK still a member of the EU but subject to the 2018 Act which purport to have retroactive effect. Article 89 of the Withdrawal Agreement (endorsed by HMRC v Perfect) make ECJ decisions relating to litigation commenced before Brexit or during the first period binding. ECJ decisions post Brexit only persuasive. See Lipton and The Umbrella Interchange.
• (7:04) Effect of section 2 2018 Act - saves EU-derived domestic law before IP Completion Day subject to Section 5 (supremacy) and Schedule 1 (Francovich damages).
• (8:56) Schedules 1 and 8 2018 Act - transitional provisions. To what extent, post Brexit, can you rely on general principles of EU law?  Allianz Global v Barclays.
• (12:01) Section 3 of the 2018 Act (incorporation of direct EU legislation) which is subject to Section 5 and Schedule 1.
• (13:06) Section 4 of the 2018 Act (the saving of rights under section 2 ECA). Wide rule important in direct tax field (eg transfer of assets code). Effect in tax law of The Freedom of Establishment and Free Movement of Services EU Exit Regulations 2019. Effect of EU Directives and CG Fry & Son Ltd. Purposive interpretation dealt with in section 6. Harris v Environment Agency.

The second period: 1st January 2021 - 31st December 2023

• (19:49) Section 6 of the 2018 Act (extent to which UK courts bound by ECJ judgments).  HMRC v Perfect, Lipton and The Umbrella Interchange cases.

The third period: post 1st January 2024

• (22:18) RULA now takes effect. It is not retrospective and only covers disputes that relate to the period post January 2024.
• (23:53) Section 2 of RULA repeals section 4 of the 2018 Act. Section 3 of RULA abolishes the supremacy of EU law. Will therefore be very difficult to rely on EU law in the direct tax arena (even in Transfer of Assets Code) post 1st January 2024.
• (25:54) VAT and excise duties in a different position due to section 28 Finance Act.
• (27:10) Section 6 of RULA is not yet in force. Amended test as regards looking at earlier cases. VAT most likely to be affected.

EU law remains very relevant up to 1st January 2024, despite Brexit. And EU law remains relevant going forward in the VAT context. After 1st January 2024 EU law may still have an impact on the construction of UK law.

Citations

Legislation

• Retained EU Law Revocation & Reform Act 2023 ("RULA")
• European Union (Withdrawal) Act 2018 (the "2018 Act")
• Article 89 Withdrawal Agreement
• The European Communities Act 1972
• The Freedom of Establishment and Free Movement of Services EU Exit Regulations 2019
• Section 28 Finance Act 2024

Transfer of Assets Code

Cases

• HMRC v Perfect [2022] EWCA Civ 330
• Lipton v BA Cityflyer Ltd [2024] UKSC 24, 3 WLR 474
• The Umbrella Interchange Fee Claimants v The Umbrella Interchange Fee Defendants[2024] EWCA Civ 1559 and [2023] CAT 49.
• Franciovich and Bonifaci v Italy
• Allianz Global Investors & Or v Barclays Bank & Ors [2022] EWCA Civ 353
• CG Fry & Son Ltd [EWCA] Civ 730 on appeal to the Supreme Court
• Omagh Leasing
• Harris v Environment Agency [2022] EWHC 2264 (Admin)

David Milne KC, Richard Vallat KC and Calypso Blaj discuss the implications of Hargreaves, in particular:

1. What we can say about what is meant by "beneficial entitlement"? 
2. How is it different to "beneficial ownership"? 
3. And indeed to the trust law concept of both? 
4. Is there a different international fiscal meaning of beneficial entitlement?

The panel look at where these issues may come up in practice. How definitive is the Hargreaves case? They also take a look at Altrad Services and the loss of beneficial ownership.

Discussion of Hargreaves

2:38 Whether interest payments made to a UK resident company fell within an exception to the obligation to withhold tax on payments of interest under ITA. This depends on whether the recipient is beneficially entitled to the income. The CA reviewed the case law (para 49ff of the judgment). It then applied the principles to the facts (para 61ff).

8:10 It is important that the provisions put in place were specifically to obtain a tax advantage (which was admitted). The question was whether the tax planning worked. The recipient of the interest payments was under a contractual obligation to pay on the money it received so was it the beneficial owner therefore? The judgment gives guidance as to the domestic meaning of beneficial entitlement.

11:39 What of the rival definition of "beneficially entitled", also known as the international or fiscal meaning? Should this be adopted in a withholding tax situation? Discussion of Indofood and the ECJ cases in 2019. The international, fiscal meaning has to take into account the objects and purposes of the Convention including avoiding double taxation. This differs from the domestic law requirements per Ramsay of whether the concept fits within the statutory purpose and context of the provisions.

17:05 Conduit arrangements (insertion of a company) caught under either definition. However, theoretically there may be other cases where you are treated as being beneficially entitled under say the international, fiscal meaning but not under the domestic meaning.

18:35 The domestic meaning should not be dependent on finding a tax avoidance motive.  

Losing beneficial ownership

20:00  Altrad Services/Wiseman. Turned on "ceasing to own" in s61 Capital Allowance Act. Marketed tax avoidance scheme. Application of Ramsay purposive principle. See Tax Journal article on Altrad in July 2024. Case quite an extreme example so there might be other cases which are less clear cut.

28:07 NB there does not have to be someone who has beneficial ownership.

Areas where beneficial ownership comes up

28:47 Withholding tax on interest payments, double tax treaties (dividends and royalties), domestic group relief provisions (eg CGT, substantial shareholding exemption, SDLT).

Other comments

30:52 What if the conduit company in Hargreaves had actually used some/all of the money even for a short period? Or had another reason for existing other than being a conduit?

31:54 What if in Altrad, the complex arrangements designed to take advantage of capital allowances had actually been subject to a contract that was rescinded?

Legislation

Income Tax Act 2007 s933

Capital Allowances Act s61

Directive 2003/49

Cases

Hargreaves v HMRC [2024] EWCA Civ 365

Sainsburys v O''Connor [1991] EWCA Civ J0522-3

Parway Estates v IRC (1958) 45 TC 135

Bupa Insurance Ltd v HMRC [2014] UKUT 262 (TCC)

Indofood International Finance v JP Morgan Chase Bank [2006] STC 1195

WT Ramsay Ltd v IRC [1982] AC 300

Altrad Services v HMRC  [2024] EWCA Civ 720

Hurstwood & Rosingdale [2021] UKSC 16

Wood Preservation v Prior [1969] 45 TC 112

Joined cases C-115/16, C-118/16, C-199/16 and C-299/16

Gestmin SGPS SA v Credit Suisse [2013] EWCA 3560 (Comm)

Philip Baker KC's commentary on the OECD Model Convention (2017)

 Tax Journal article on Altrad in July 2024

In this episode, Elizabeth Wilson KC and Ronan Magee take a look at the "unallowable purpose rule" in the loan relationship code and in particular three recent Court of Appeal cases – Kwik-Fit (in which Elizabeth Wilson KC and Ronan Magee acted), BlackRock and JTI Acquisitions (in which Elizabeth Wilson KC acted).

• (2:28) outline of the unallowable purpose rule. It involves a multi-layered test.
• (4:45) a key element is what, as a matter of fact, is the group's purpose in organising the borrowing. You decide this by looking at all the facts therefore. Discussion of this in relation to the JTI Acquisitions case, Kwik-Fit and BlackRock.
• (9:48) companies have been trying to narrow what the courts can consider when applying the test. The Court of Appeal has clearly shown this cannot be done.
• (11:52) JTI Acquisitions underlines that a company must prove its case on all the facts. It cannot be selective.
• (13:50) Do you need to be coming to the UK for other reasons, not just tax reasons, in order to benefit from the rule?
• (16:00) Syngenta: there must be proper evidence and not window dressing/assertions. What role do documents and witness evidence have in establishing facts? Importance of getting all your evidence (documentary and witness) before the tribunal.
• (22:45) Kwik-Fit: genuine commercial losses in one part of the group which they sought to set against profits in other parts of the group. The disallowed losses were, however, capped which shows the attribution rule in its safeguarding role.
• (29:01) new loan relationship code anti-avoidance provision ss445B - D.
• (30:47) some questions are not yet answered (eg attribution).

 Cases/legislation

 Cases

Kwik-Fit [2024] EWCA Civ 434

Blackrock [2024] EWCA Civ 330

JTI Acquisitions [2024] EWCA Civ 652

Fidex [2016] EWCA Civ 385

Travel Documents Service [2018] EWCA Civ 549

Syngenta [2024] UKFTT 998 (TC)

Gestmin [2013] EWHC 3560 (Comm)

Kogan v Martin [2019] EWCA Civ 1645

Euromoney [2022] UKUT 205 (TCC)

Legislation

 ss441 and 442 Corporation Tax Act 2009

s1139 Corporation Tax Act 2010

ss445B - D Corporation Tax Act 2009