Weekly Tax Update - 14 March 2016

1. General news

   1.1 Budget - 16 March 2016

   Smith & Williamson will be sending out its usual communication to clients and contacts on the evening of the Budget on Wednesday, linking to comment and analysis that we will place on our website. This will be available from:

   www.smith.williamson.co.uk/budget-2016

   1.2 Finance Bill publication date

   The Financial Secretary to the Treasury, David Gauke, has announced that the Finance Bill will be published on Maundy Thursday, 24 March 2016. The Finance Bill should be published on the Parliament website (the second hyperlink is for bookmarking) and the related explanatory notes on gov.uk.

   http://www.parliament.uk/business/publications/written-questions-answers-statements/written-statement/Commons/2016-03-11/HCWS610

   http://services.parliament.uk/bills/

   1.3 HMRC to charge credit card fees

   With effect from 1 April 2016, HMRC will be able to charge a fee for payments made to it by credit card.

   This is so that HMRC recovers the cost of processing credit card payments.

   The Schedule to SI 2016/333 sets out the rates, which vary by type of credit card.

   www.legislation.gov.uk/uksi/2016/333/contents/made

2. Private client

   2.1 Entrepreneurs' relief: deferred shares count as ordinary shares

   In a recent entrepreneurs' relief case, Mr Castledine lost his appeal in connection with his disposal on his interest in Dome Holdings Limited (DHL). He held just under 5% of the share capital if deferred shares were included, but exactly 5% and therefore entitlement to the relief if excluded.

   The First-tier Tribunal (FTT) held that the deferred shares fell within the meaning of 'ordinary share capital' in ITA2007 s.989 as applied to entrepreneurs' relief, and that the appeal failed.

   The case includes a useful summary on the interpretation of tax legislation and when the FTT considers a literal approach or a purposive interpretation can be taken. The FTT decided to follow the strict wording rather than an alternative judicial interpretation because:

   'It would appear that parliament is here making it clear that there are to be no fine distinctions or special exceptions in the matter; that a simple, broad brush, easily workable, approach is mandated. Moreover, there is no explicit evidence of parliamentary intention relevant to the point we have to decide; and it is questionable whether even if there had been such evidence in the form, for example, of Notes on Clauses or extracts from Hansard, it would have been proper for the tribunal to take it into account.'

   In contrast, in tax abuse cases, the GAAR now requires regard to be taken of the principles on which provisions are based and their policy objectives.

   www.bailii.org/uk/cases/UKFTT/TC/2016/TC04930.pdf

3. PAYE and employment

   3.1 Rangers going to the Supreme Court

   Rangers' liquidators BDO have succeeded in obtaining permission to appeal the EBT case, Murray Group Holdings and others v HMRC [2015] CSIH 77, to the Supreme Court. The decision could have seminal influence not only for EBTs generally but also in the wider employee benefits area. It may well become the leading case for other EBTs to distinguish themselves from or to follow as a precedent, depending on the outcome.

   We hope the court takes the opportunity of laying down clear and comprehensive guidelines for this whole area of employment tax. It has been a long wait since the original Special Commissioners judgment in Dextra in 2002 (STC (SCD) 413), which only partially covered the...