Other news in brief
Other news in brief
A round up of other news this week.
In Centrica Overseas Holdings Ltd v HMRC the First-tier Tribunal (FTT) held that advisers' fees incurred by an investment company, Centrica Overseas Holdings Limited (COHL), in relation to a potential disposal of the assets of a subsidiary were not deductible expenses of management for COHL on the basis that the management decision, to make the disposal, was taken by its parent entity Centrica PLC. The judgment of the FTT noted that ”in order to obtain relief, group companies must be conscious of the need for the ‘corporate plumbing’ to be properly installed and must ensure that the relevant investment company manages its own investment business”. In this case the decision to make the disposal had been made by Centrica plc’s Board and, while Centrica plc and COHL shared some individual directors, there was no evidence such as board minutes that the management decision had been specifically discussed or approved at COHL board level. This case highlights the importance of the actual role and decisions made by a company’s board of directors in assessing the eligibility of management expenses incurred by that company.
The OECD has recently released an information brochure summarising the development of the Multilateral Instrument (MLI) as part of the measures implemented under the base erosion and profit shifting (BEPS) project. Offering a timeline of the MLI from its conception through to its entry into effect, the brochure summarises its key features, the jurisdictions the measure covers and answers frequently asked questions about the measure.
The Public Accounts Committee has opened an inquiry into the management of tax reliefs. This follows the publication of a National Audit Office report in February 2020 which raised concerns about the lack of formal framework for the oversight of tax reliefs and monitoring of their effectiveness and value for money. The Committee is inviting evidence on its inquiry with a deadline of Friday 5 June 2020. Later in June the Committee will question officials from both HM Treasury and HMRC on the management of tax reliefs, the number of reliefs and the Government’s understanding of whether they represent value for money.
The dates for the Committee stage for Finance Bill 2020 have now been published – the Public Bill Committee will commence proceedings on 4 June 2020 and will then meet every Tuesday and Thursday until their proceedings are scheduled to complete on 25 June. The Government has also tabled some amendments to the Bill, most notably to re-introduce the IR35 provisions discussed elsewhere in this edition of Tax Matters Digest. Other amendments have been tabled in relation to the UK loan charge rules for disguised remuneration arising from concerns around the potential impact of COVID 19. If enacted, these amendments will permit HMRC to: (1) extend the deadline for an election to be made to split the loan charge over three years; and (2) extend the disapplication of interest in respect of 2018/19 liabilities.
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