Insight and analysis for the business tax community Published by Tolley Issue 1270 11 July 2015 Budget review Your definitive guide to the Summer Budget The big picture: Osborne unbound Chris Sanger Head of tax policy EY The latest in the war on non-compliance James Bullock Head of litigation and compliance Pinsent Masons A big Budget for big business Dominic Robertson Partner Slaughter and May Why it’s a mixed bag for OMBs David Whiscombe Tax technical director BKL Tax The chancellor giveth but he also taketh away Sue Laing Partner Boodle Hatfield Economic view: pain still to come John Hawksworth Chief economist PwC Special edition ASK AN EXPERT Earn-outs and deferred consideration Lisa Stevenson Founding partner Parisi Tax IN BRIEF n Is Anson a source of relief or confusion? n Reasonable excuse v special circumstances n VAT recovery: zoo has lion’s share of the argument BE FIRST OFF THE LINE Tolley ® Exam Training Delivering unrivalled results on The Front Line With Tolley ®Exam Training you can be confident that we have the expert knowledge needed to help you pass your examinations first time. Our dedication to helping our students succeed has resulted in our pass rates significantly outperforming the national average time after time, giving our students the knowledge and skills they require to progress their careers in tax. For more information on achieving success with Tolley visit tolley.co.uk/examtraining, email [email protected] or call 020 3364 4500 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 0615-100. 0615-100 Tolley Exam Training Pass Rates Advert_June 2015.indd 1 25/06/2015 17:00 Contents 2 News From Covering the key developments in tax. 4 Cases the editor Reporting recent tax cases that matter. What a blockbuster! The first Conservative Budget for 6 In brief 19 years sees ‘Osborne unbound’ (Chris Sanger, p 8). Jonathan Cooklin and Dominic Foulkes (Davis Polk) comment This was ‘a reforming Budget’ which sets out plans for a lower tax future ‘but boosts the exchequer’s coffers on the much awaited Supreme Court decision in Anson; Peter greatly in the short term’. It was also ‘a surprisingly Vaines (Squire Patton Boggs) considers when an application to big Budget for big business’ (Dominic Robertson, reduce penalties because of ‘special circumstances’ is a better bet p 24). The unexpected announcement of further than ‘reasonable excuse’; and Graham Elliott (City & Cambridge cuts to corporation tax is offset by a requirement for Consultancy) considers a recent tribunal decision on input tax larger businesses to pay up early. And there is to be recovery which has implications for the exempt cultural sector. a tougher CFC regime, too. On the compliance and enforcement front, not much was genuinely new Budget review ‘except for the rhetoric’ (James Bullock, p 23). The promised £5bn clampdown on avoidance and evasion 8 Q&A: the big picture is expanded to tackle ‘imbalances’ in the tax system, Chris Sanger (EY) provides an overview of the Summer Budget. such as dividend taxation. ‘One wonders which of today’s tax reliefs will be tomorrow’s “distortions”’ (David Whiscombe, p 24). Changes to the non-dom 10 Summary of the key tax measures rules were widely expected, but the scale of reform Your Lexis®PSL guide to all the tax measures, which include: surprised many. There were some popular measures nfuture cuts to the main rate of corporation tax; for Middle England. As always though, ‘the chancellor na new permanent level of the annual investment allowance for giveth but he also taketh away’ (Sue Laing, p 25). capital allowances; nchanges to the CGT treatment for investment fund managers in Editor Paul Stainforth respect of carried interest; [email protected] nremoving corporation tax relief for the cost of future acquisitions of goodwill and ‘customer related intangible assets’; Editorial Board nchanges to the bank levy and a new corporation tax surcharge Graham Aaronson QC, Dave Hartnett CB, for banks; Joseph Hage Aaronson Independent adviser nwide ranging reform of the non-dom rules; Paul Aplin OBE, ICAEW Tax John Hayward, Faculty Technical Committee Pensions consultant nchanges to the taxation of dividends for individuals; Philip Baker QC, Francesca Lagerberg, n Field Court Tax Chambers further changes to pensions tax relief; and Grant Thornton n Ian Brimicombe, AstraZeneca Pete Miller, a planned consultation on sanctions for serial avoiders and James Bullock, The Miller Partnership measures to strengthen the GAAR. Pinsent Masons David Milne QC, Michael Conlon QC, Pump Court Tax Chambers Temple Tax Chambers Chris Morgan, KPMG 23 Expert comment Peter Cussons, PwC Paul Morton, Reed Elsevier Bill Dodwell, Deloitte Practitioner views on the Budget: Lakshmi Narain, Baker Tilly Stephen Edge, n Jennie Rimmer, Aspen James Bullock (Pinsent Masons) considers the enforcement Slaughter and May Ernst & Young Judith Freedman CBE, Chris Sanger, and compliance measures; University of Oxford Adrian Shipwright, MLaw n Dominic Robertson (Slaughter and May) examines the impact Malcolm Gammie CBE QC, John Whiting OBE, 1 Essex Court Office of Tax Simplification on multinationals; Melanie Hall QC, Judge Christopher Vajda, n David Whiscombe (BKL Tax) considers how OMBs fared; Monckton Chambers CJEU n Sue Laing (Boodle Hatfield) provides a private client Editor: Paul Stainforth (tel:020 3364 4448; Missing copy? email: [email protected]) Contact customer services (tel: 0845 370 1234; Editorial team: Santhie Goundar, email: [email protected]). perspective; and Julia Burns & Nick Raad Cases: Cathya Djanogly To access our website Tax Journal subscribers are entitled to unrestricted n John Hawksworth (PwC) gives an economic view. Design: Mark Chanter access to www.taxjournal.com. If you are missing log Production manager: Angela Waterman in details, email [email protected]. Marketing manager: Victoria Newman Publisher: Chris Jones About Tax Journal This publication is intended to be a general guide To contribute 27 Ask an expert Please email a synopsis of the topic you would like and cannot be a substitute for professional advice. to cover (what it is & why it matters) to the editor. Neither the authors nor the publisher accept any Unsolicited articles are rarely published. responsibility for loss occasioned to any person Lisa Stevenson (Parisi Tax) answers a question on the tax acting or refraining from acting as a result of To advertise material contained in this publication. For all recruitment and display advertising, contact implications on deferred consideration and earn-out consideration Nick Lee (tel: 020 8662 2065; email: nick.lee@ All rights reserved. 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Join the Tax Journal group on LinkedIn Follow us on Twitter @tax_journal 11 July 2015 ~ www.taxjournal.com 1 News Covering the key developments in tax on 2 July 2015. They update references in Business taxes People and firms the principal regulations to reflect the fact that the Landfill Tax (Qualifying Fines) Summer Finance Bill EY has promoted 95 new equity partners. Order 2015 lapsed and was replaced by The Summer Budget on 8 July 2015 is to For full list of names, see www.bit. the Landfill Tax (Qualifying Fines) (No. 2) ly/1RlR0lZ. be followed by publication of the Finance Order 2015 from 15 June 2015. Bill and explanatory notes on 15 July. BDO has promoted nine new partners in the UK, including corporate tax adviser Cultural TV programmes Dan Brookes as tax partner in its Yorkshire International The Cultural Test (Television practice, formerly from EY. Programmes) (Amendment) Regulations, Baker Tilly has appointed Stephen Hunter OECD calls for better use of SI 2015/1449, change the cultural test for as tax partner for the North West region. He environmental taxes drama and documentary programmes previously worked for KPMG for 20 years, ‘Governments should make better use of with effect from 23 July 2015, bringing where he was head of tax for the Lancashire, environmental taxes’ is the conclusion of this into line with the cultural test for Cumbria & Merseyside region. the OECD’s latest Global International film which was introduced in 2007. The New Quadrant Partners, the London Tax Dialogue (ITD) conference. Taxes are regulations also propose the same test based boutique private client law firm, has potentially among the most effective ways for children’s television programmes, appointed Helen McGhee (formerly Patton of cutting pollution and greenhouse gas following the new relief introduced by Squire Boggs) as a senior associate with the emissions, but they are currently underused FA 2015. These cultural tests form part firm. McGhee is the winner of ‘rising star’ or designed in a suboptimal way, OECD of qualification for the corporation tax award at the 2015 Taxation awards. secretary-general Angel Gurría said last reliefs in respect of television production Global real estate consultancy JLL has week on publication of the report Taxing development.