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Business Tax Briefing - 08/09/2017

Finance Bill published
The Finance Bill 2017-19 was published today. It contains, among others, the clauses introduced in March 2017 that were withdrawn after the calling of the general election, such as the corporation tax losses carried forward (clauses 18-19 and Schedule 4); the cut to the dividend allowance from April 2018 (clause 8); the corporate interest restriction (clause 20 and Schedule 5); the substantial shareholding exemption (clauses 27 and 28); the changes to the non-dom rules (clauses 29-33 and Schedules 8-10) and enabling legislation for Making Tax Digital (clauses 60-62 and Schedule 14). It is expected that the Committee Stage will start by mid-October. Royal Assent is likely in the first or second weeks of November. The Finance Bill is available here The Explanatory Notes are available here

Clauses for December 2017 Finance Bill

The Financial Secretary to the Treasury, Mel Stride, has announced that certain clauses for the December 2017 Finance Bill will be published on 13 September 2017, for comment by 25 October 2017. These clauses will represent legislation for measures announced at Spring Budget 2017 and are being released as part of the transition to the new Budget/Finance Bill timetable.

OECD releases further guidance on Country-by-Country reporting to tax authorities

The OECD's Inclusive Framework on BEPS has
released two sets of guidance to give greater certainty to tax administrations and multinational groups on the implementation and operation of Country-by-Country (CbC) Reporting (BEPS Action 13). Existing guidance on the implementation of CbC Reporting has been updated and now addresses the following issues:

       the definition of revenues;

       the treatment of MNE groups with a short accounting period; and

       the treatment of the amount of income tax accrued and income tax paid.

Guidance has also been released on the
appropriate use of the information contained within CbC Reports. This includes guidance on the meaning of "appropriate use", the consequences of non-compliance with the appropriate use condition and approaches that may be used by tax administrations to ensure the appropriate use of CbCR information. Further information can be found at

Dbriefs webcasts

The next Dbriefs webcast is on Tuesday 12 September at 12.00 BST/13.00 CEST. The topic is UK Tax Monthly Update and our panel of experts will provide an update on corporate tax, employment tax, and indirect tax. To register for the webcast, click

On Wednesday 13 September at 12.00 BST/13.00 CEST there is a webcast titled SAF-T and Other E-Audit Developments. From the tax management and tax accounting series, hosted by Daniel Lyons, our panel of experts will discuss the growing trend for tax authorities to request large volumes of detailed information from businesses for processing and e-auditing tax returns, especially for VAT. This includes looking at the OECD’s Standard Audit File for Tax (SAF-T), and approaches being adopted in Europe. To register, click

On Thursday 14 September at 12.00 BST/13.00 CEST there is a webcast from the transfer pricing series, titled G20/OECD – BEPS: Permanent Establishments. During the webcast our panel of experts will discuss the recommended changes to the permanent establishment threshold proposed as part of the G20/OECD’s work on Base Erosion and Profit Shifting (BEPS) and how the new rules might affect your organisation. To register, click

Global Forum on Transparency and Exchange of Information for Tax Purposes

The OECD has announced that four new jurisdictions have joined the Global Forum on Transparency and Exchange of Information for Tax Purposes ('the Global Forum'). The addition of Cambodia, Greenland, Haiti and Madagascar increases the total number of members to 146. Jurisdictions joining the Global Forum are committed to implementation of both the international standard of exchange of information on request and the standard on automatic exchange of financial account information. Greenland will start its first automatic exchanges in 2018; the other three will participate as soon as practicable.

: property planning is an abuse of law – AGO

Cussens, AG Michal Bobek has considered whether the leasing of Irish holiday homes was an abuse of law. Although Member States have embraced the abuse of law principle “with a passion”, he notes that its true nature has remained “hazy and unexplored”. In this case, the taxpayer made a “first supply” of holiday properties by leasing them to a connected party. The leases were cancelled a month later and the properties sold to third parties (VAT exempt on the basis that the first supply had already taken place). In the AG’s Opinion, this was an example of an abuse of law. The structure resulted in a “tax advantage” which was contrary to the purpose of the VAT Directives, as the leases did not result in the properties “leaving the production process”. They were entered into with a related party, lasted only a short time, and were in any event subject to a leaseback. The “essential aim” of the leases (not the broader commercial objective of selling the properties) appeared to be achieving that advantage. The Irish tax authorities were entitled to apply abuse of law even though the facts pre-dated Halifax, and even in the absence of national legislation on abuse of law principles. They were therefore entitled to ignore the leases and treat the third party sales as subject to VAT as if they were "first supplies". To discuss the case, please contact Ben Tennant on 0121 695 5828.

Avon Cosmetics
: UK’s derogation for direct sales endorsed by AG

Avon representatives (who are not normally VAT-registered) purchase goods from Avon Cosmetics and sell them to consumers. In order to ensure that this direct selling model does not result in profits on retail sales escaping VAT, HMRC obtained a derogation allowing it to direct companies like Avon to account for VAT on the retail price: the company might sell goods for 75, but had to account for VAT on a final selling price of 100. Avon claimed that this derogation was being operated unfairly, in that it failed to take into account products which Avon representatives purchased for demonstration purposes. Avon was expected to account for output tax on the representatives' retail sales, but did not get any credit for input tax in relation to products consumed in the individual retail businesses. In
AG Michal Bobek’s Opinion, however, the UK’s derogation is valid. The derogation does not refer to notional input tax, and it is not meant to reflect precisely what would happen if Avon representatives were VAT-registered. This does not mean that the derogation breaches fiscal neutrality or proportionality. The UK's failure to refer to notional input tax when seeking the derogation was irrelevant, as the existence of such VAT would have been obvious. In the AG’s Opinion, Avon’s claim for overpaid VAT should therefore be rejected. To discuss the case or its implications, please contact Matt Davies on 0121 696 8559.

This publication has been written in general terms and we recommend that you obtain professional advice before acting or refraining from action on any of the contents of this publication. Deloitte LLP accepts no liability for any loss occasioned to any person acting or refraining from action as a result of any material in this publication.

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