Weekly case highlights ― 13 September 2021

Produced by Tolley

The following Owner-Managed Businesses guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Weekly case highlights ― 13 September 2021
  • Corporation tax
  • Dane Group Holdings Ltd v HMRC
  • Kwik-Fit Group Limited and Others v HMRC
  • Employment tax
  • Smallman & Sons Ltd and Others v HMRC
  • Marlborough DP Ltd v HMRC
  • Investment schemes
  • Fashion On The Block Ltd v HMRC
  • Pensions
  • More...

Weekly case highlights ― 13 September 2021

These are our brief notes and thoughts on cases published in the last week or so which caught our eye and are likely to be of particular interest to tax practitioners. Full case reports and commentary on most of these cases will be included within our normal reference sources in the coming weeks.

Corporation tax

Dane Group Holdings Ltd v HMRC

Large companies and groups are (generally) entitled to research and development relief at 25%. Small and medium-sized enterprises are eligible for relief at a higher rate. Venture capital companies can be eligible for relief at the SME rate even if they are a member of a group, provided that they are autonomous: in very broad terms that they carry on investment activities which have commercial reality in their own right rather than support the activities of the wider group. This dispute was whether a member of a group of companies qualified in its own right as a venture capital company. This is ultimately a matter of fact and the detail may not be of wide interest, but all involved in advising on R and D tax credits will want to read paragraphs 92 onwards, particularly the discussion of the status of HMRC’s guidance in this area.

Kwik-Fit Group Limited and Others v HMRC

Interest incurred by a company is (at a very high level of generalisation) tax-deductible unless it was incurred for a tax avoidance purpose. Here, the group carried out an internal reorganisation after the acquisition of another large group of companies. As is so often the case, there were genuine commercial reasons to support what was done as part of a refinancing arrangement, but there was also no doubt that tax efficiency was a feature of the planning. The evidence was that it would enable relief for accumulated losses to be obtained immediately rather than over the estimated 25 years which would have been required without the restructuring. HMRC

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