Weekly case highlights ― 31 August 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 ― 31 August 2021
  • Business tax
  • Centrica Overseas Holdings Ltd v HMRC
  • Employment tax
  • Vermilion Holdings Ltd v HMRC
  • R (on the application of Clamp and another) v HMRC
  • Transactional tax
  • Almacantar (Marble Arch) SARL and another v The Railway Pension Exempt Unit Trust (acting by its Trustee BNY Mellon Trust & Depositary (UK) Ltd)

Weekly case highlights ― 31 August 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.

Business tax

Centrica Overseas Holdings Ltd v HMRC

Investment companies ― those whose business consists wholly or partly of making investments ― are entitled to tax relief for the expenses of managing their investments, provided that the expenditure is not capital in nature. The legislation has very little to say about these terms and over the years case law has developed a distinction between expenses incurred in deciding whether to acquire or dispose of an asset and expenses incurred on the ‘mechanics of implementation’ once the decision has been taken. The former is allowable and the latter are not. Not surprisingly, this test is not hard and fast and there will inevitably be differences of view as to where one activity stops and the other starts. Here the First-tier Tribunal had (subject to the proviso made in the following paragraph) drawn the line at a point which, in the Upper Tribunal’s view, was too favourable to HMRC. On some points, the Upper Tribunal remade the decision on the facts ― on others, it remitted the case back to the First-tier Tribunal for further findings of facts.

These issues are fact-specific but there is a wider point here which will be of importance to all advisers dealing with large corporate groups. The First-tier Tribunal had decided that the management activities were not actually carried out by the company itself. Decisions were made higher up in the group structure by employees and directors working at a group lev

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