Insight and analysis for the business tax community Published by Tolley Issue 1259 24 April 2015 Finance Act focus Expert views on FA 2015: Diverted profits tax: operation and key issues Sandy Bhogal Mayer Brown Anti-avoidance on loss refreshing Nigel Doran Macfarlanes Oil and gas measures Derek Leith & Bob Cardno EY B share schemes Helen Gilbey & Sarah Falk Freshfields Bruckhaus Deringer Restrictions to entrepreneurs’ relief Andrew Roycroft Norton Rose Fulbright The impact on goodwill Anne Fairpo Temple Tax Chambers CGT for non-residents Andrew Goldstone & Katherine Forster Mishcon de Reya Disguised investment management fees Double edition Stephen Pevsner & Laura Charkin King & Wood Mallesons Private placements James Hume Slaughter and May PLUS n This month’s international tax briefing n VAT on credit notes and contingent discounts SPRING SALE Save up to 40% on tax books www.lexisnexis.co.uk/ taxspring Reed Elsevier (UK) Limited trading as LexisNexis. Registered office 1-3 Strand London WC2N 5JR Registered in England number 2746621 VAT Registered No. GB 730 8595 20. LexisNexis and the Knowledge Burst logo are trademarks of Reed Elsevier Properties Inc. © LexisNexis 2015 0215-040. The information in this document is current as of DATE and is subject to change without notice. Contents From 2 News 4 Cases the editor 6 Finance Act 2015: an overview Your guide to the newly enacted Finance Act, by EY. Finance Act 2015 adds another 340 pages to the already burgeoning UK tax code. It is not the longest FA 2015 analysis Finance Act by any means – that honour goes to FA 2012 which, among other things, introduced a 10 Diverted profits tax new regime for CFCs. But it is the longest Finance Sandy Bhogal (Mayer Brown) highlights key features and potential Act to be rushed through before a general election, issues. with just a single day’s debate in Parliament. Only a handful of (relatively minor) measures were deferred, but there was never going to be any delay to the 16 Oil and gas measures introduction of the diverted profits tax. And the Act Derek Leith and Bob Cardno (EY) review the new support measures. does include significant changes from the earlier draft provisions, including to the DPT rules. 20 Loss refreshing The purpose of this edition is to provide you with Nigel Doran (Macfarlanes) examines the new anti-avoidance rule. a handy guide to the final rules. We have a four page overview, followed by detailed expert insight on some 22 B share schemes of the highlights. I thank all our authors for their contributions, and I hope you find this edition to be a Helen Gilbey and Sarah Falk (Freshfields Bruckhaus Deringer) report. useful reference guide. We can look forward to another Finance Act later 24 Restrictions to entrepreneurs’ relief this year, presumably in July, when hopefully there The latest changes to entrepreneurs’ relief do not suggest a clear will be a more meaningful Parliamentary debate. pattern in HMRC’s views as to what is acceptable tax planning, writes Andrew Roycroft(Norton Rose Fulbright). Editor Paul Stainforth [email protected] 27 Goodwill changes Anne Fairpo (Temple Tax Chambers) assesses the impact of the Editorial Board FA 2015 changes on the tax treatment of goodwill. Graham Aaronson QC, Dave Hartnett CB, Joseph Hage Aaronson Independent adviser Paul Aplin, ICAEW Tax Faculty John Hayward, 30 The new CGT regime for non-residents Technical Committee Pensions consultant Philip Baker QC, Francesca Lagerberg, Andrew Goldstone and Katherine Forster (Mishcon de Reya) Field Court Tax Chambers Grant Thornton explain how the new rules work in practice. Ian Brimicombe, AstraZeneca Pete Miller, James Bullock, The Miller Partnership Pinsent Masons David Milne QC, 34 Disguised investment management fee rules Michael Conlon QC, Pump Court Tax Chambers Hogan Lovells Chris Morgan, KPMG Stephen Pevsner and Laura Charkin (King & Wood Mallesons) Peter Cussons, PwC Paul Morton, Reed Elsevier Bill Dodwell, Deloitte consider the new rules for fund managers. Lakshmi Narain, Baker Tilly Stephen Edge, Jennie Rimmer, Aspen Slaughter and May Ernst & Young Judith Freedman CBE, Chris Sanger, 39 Private placement withholding tax exemption University of Oxford Adrian Shipwright, MLaw James Hume (Slaughter and May) examines what’s changed. Malcolm Gammie CBE QC, John Whiting OBE, 1 Essex Court Office of Tax Simplification Melanie Hall QC, Judge Christopher Vajda, 40 The international briefing for April Monckton Chambers CJEU Chris Morgan (KPMG) reviews recent global tax developments. Editor: Paul Stainforth (tel:020 3364 4448; Missing copy? email: [email protected]) Contact customer services (tel: 0845 370 1234; Editorial team: Santhie Goundar & Julia Burns email: [email protected]). Cases: Cathya Djanogly Design: Mark Chanter To access our website Tax Journal subscribers are entitled to unrestricted 42 Kumon: credit notes and contingent discounts Production manager: Angela Waterman access to www.taxjournal.com. If you are missing log Marketing manager: Victoria Newman in details, email [email protected]. Publisher: Chris Jones Leslie Allen and Waqar Shah (Mishcon de Reya) examine a recent To contribute About Tax Journal Please email a synopsis of the topic you would like This publication is intended to be a general guide decision on VAT treatment of contingent discounts and credit notes. to cover (what it is & why it matters) to the editor. and cannot be a substitute for professional advice. Unsolicited articles are rarely published. Neither the authors nor the publisher accept any responsibility for loss occasioned to any person To advertise acting or refraining from acting as a result of For all recruitment and display advertising, contact material contained in this publication. 44 Ask an expert Nick Lee (tel: 020 8662 2065; email: nick.lee@ lexisnexis.co.uk). All rights reserved. No part of this publication may be reproduced, stored in a retrieval system To subscribe or transmitted in any form or by any means, Lisa Stevenson (Parisi Tax) answers a tax query a demerger involving Contact customer services (0845 370 1234; electronic, mechanical or otherwise, without the [email protected]) prior written consent of the publisher and editor. Annual subscriptions cost £405 post-free (UK); the return of capital. £729 2 year (UK); £555 overseas 1 year. Printed by Headley Brothers Ltd, Ashford, Kent. Published by LexisNexis, Lexis House, 30 Farringdon Street, London EC4 4HH. Tel: 020 8686 9141. www.lexisnexis.co.uk 45 What’s ahead & One minute with ... © Reed Elsevier (UK) Limited 2015 ISSN 0954 7274 Key dates for your tax diary, and one minute with David Pickstone, head of tax litigation at Stewarts Law. Join the Tax Journal group on LinkedIn Follow us on Twitter @tax_journal 24 April 2015 ~ www.taxjournal.com 1 News Covering the key developments in tax payment of SDRT under the SDRT Business taxes People and firms regulations. See www.bit.ly/1btyZiW. Diverted profits tax guidance Grant Thornton has promoted two HMRC has made minor changes to its people in its real estate tax team, and VAT made a senior hire. Jessica Patel has been guidance on the diverted profits tax, promoted to director, David Farr has replacing the version published last HMRC’s handling of MOSS been promoted to associate director, and criticised December. The updated guidance corrects Matthew Stannard joins the firm from an error on page 66 in the section on the Hines as a senior manager. A report by Enterprise Nation criticises duty to notify and adds a factual description Law firm Boodle Hatfield appointed HMRC for its handling and communication relating to partnerships to the bottom of partner Simon Rylatt as head of the of changes to European VAT legislation page 10. See www.bit.ly/12Qn0GK. firm’s private client and tax team. The implemented in January, especially as appointment takes place from 1 May 2015 concerns the mini one-stop shop (MOSS). as Sara Maccallum steps down from the The EU VAT taxation report (www.bit. Personal taxes role. ly/1zFRsOl) says that, in 2013, an HMRC London-based chartered accountants investigation put the figure of non-VAT HMRC restricts EIS and VCT BKL has announced the promotion of registered firms likely to be affected at advance assurance applications Doug Sinclair to partner. He joined BKL 5,000. However, the Department for HMRC has published new guidance on three years ago as head of tax investigations Business, Innovation and Skills (BIS)figures changes to how it processes enterprise after four years at Crowe Clark Whitehill. put the number closer to 350,000, but investment schemes (EIS) advance Mazars has merged with independent that information did not inform HMRC assurance applications and EIS compliance German firm Roever Broenner Susat. research; and HMRC did little to raise statements for investments made on or after The move is said to be prompted by awareness of the changes in the marketplace 6 April 2015 in companies that exceed the changes to European audit regulation. The until just weeks before implementation. prescribed age and investment limits. merged business has more than 1,000 staff, Emma Jones (Enterprise Nation) said: including 68 partners, in 12 offices around With immediate effect, HMRC will not ‘The EU VAT regulations caused havoc in the country. The merger has immediate process advance assurance applications in effect, subject to the approval of the the digital small business community. If respect of companies that, in general: German competition authorities. Philippe details of the new charges and reporting n are more than seven years old and have Castagnac, Mazars’ group CEO, said the responsibilities had been communicated not received a risk finance investment in merger ‘strengthens our position at the earlier, we’re sure there could not only the past (which includes any investment heart of Europe’s first economic power.