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Business Tax Briefing - 12/05/2017

Criminal Finances Act 2017
The enacted text of the Criminal Finances Act 2017, which received Royal Assent on 27 April, has now been published. The Act inter alia creates offences for cases where a person associated with a company or partnership facilitates the commission by another person of a tax evasion offence. See

OECD launches facility to disclose CRS avoidance schemes; CRS exchange relationships
The OECD has launched a new disclosure facility in connection with the exchange of account information by financial institutions under the Common Reporting Standard (CRS). The online facility allows parties to report potential schemes, products or structures that may be used for the circumvention of CRS reporting. Reports will be analysed by the OECD to assess the risk they present to the overall integrity of the CRS with a view to agreeing appropriate courses of action. See

The OECD has also announced that an additional 500 bilateral relationships for the exchange of CRS information have been established. As of May 2017, there are over 1,800 exchange relationships activated between more 60 jurisdictions committed to the CRS, most of them based on the CRS Multilateral Competent Authority Agreement (CRS MCAA). The first exchanges are scheduled to take place in September 2017. See

Turkey has recently signed the CRS MCAA, in time to commence automatic exchanges in 2018. Turkey
is the 88th jurisdiction to sign the CRS MCAA. See

Dbriefs webcasts
The next Dbriefs webcast is on Wednesday 31 May at 13.00 BST/14.00 CEST. The topic is Comparables And Economic Valuation In The EU and it is from our transfer pricing series. André Schaffers will be hosting and during the webcast our panel of experts will discuss the recent studies by the European Commission on comparables and economic valuation in transfer pricing issues and what their impact might be on your organisation. To register for the webcast, click here.

High Court refuses claim for refund of amounts paid under UK-Switzerland agreement
The High Court has dismissed a claim by an individual seeking a refund of amounts paid to HMRC under the provisions of the now terminated UK-Switzerland Agreement on cooperation in the area of Taxation. The individual’s bank in Switzerland wrote to her in 2012, warning her that, unless she gave written permission for it to disclose account details to HMRC, it would be required to withdraw an amount from her bank accounts, calculated in accordance with a formula in the Agreement, and pass this on to HMRC on an anonymous basis. No response was received, and thus in 2013 a one-off payment of approximately £57,000 was duly taken.

As this was more than the estimated amount of UK tax, interest and penalties which would likely have been agreed if there had been a disclosure, the individual attempted to rectify the position with HMRC by making a voluntary disclosure and seeking a refund of the excess. The High Court agreed that HMRC had statutory authority to retain the amounts and that there was no statutory right to a refund. HMRC had exercised its discretion to make refunds in certain cases relating to the Agreement, but not where the levy was paid as a result of taxpayer inaction or error, and the judge did not consider HMRC had exercised its discretion wrongly in this case. See

HMRC warning about new email phishing scam
HMRC are strongly advising taxpayers to be on the lookout for a new phishing scam. A number of bogus emails with the subject line ‘Your 2016 Tax Report’ and an attachment have been reported. Taxpayers are advised not to open the email. See for HMRC’s general guidance on recognising phishing emails.

EU Commission to propose measures against intermediaries who facilitate tax evasion
During a regular hearing with MEPs, Pierre Moscovici – the EU Commissioner for Economic and Financial Affairs, Taxation and Customs – confirmed that the European Commission is drawing up a “tough and wide-ranging” proposal for measures against intermediaries who facilitate tax evasion. The proposed rules, which are expected to be made public in June, will apply to “all intermediaries, cover all harmful practices, and all jurisdictions”. Mr. Moscovici stated that the Commission would prefer a “hard law” rather than a code of conduct, but also indicated that this would not include criminal sanctions.

In the same hearing, Mr. Moscovici confirmed that the prospective list of non-cooperative tax jurisdictions, which the Commission has been working on in recent months, will be presented to EU finance ministers in June’s ECOFIN meeting, with its expected adoption by the end of September. See

Kuwait signs Mutual Administrative Assistance Convention
Kuwait signed the Multilateral Convention on Mutual Administrative Assistance in Tax Matters on 5 May 2017, becoming the 110th jurisdiction to join. The Convention provides for administrative assistance in tax matters: exchange of information on request, spontaneous and automatic exchanges, tax examinations abroad, simultaneous tax examinations, and assistance in tax collection. See

Posnania: CJEU decides that Polish forced sales are outside the scope of VAT
The CJEU has ruled that the transfer of property by Posnania Investment SA to the Polish tax authorities in partial settlement of tax arrears was not subject to VAT. It recognised that the transfer had most of the characteristics of a taxable transaction – for example, there was a legal relationship between Posnania (as transferor) and the tax authority (as recipient). However, the relationship arose from the authority imposing tax by statute, and did not therefore entail reciprocal performance. The CJEU has therefore endorsed Advocate General Kokott’s Opinion, although the distinction between the transfer of the property (potentially a supply by Posnania) and the collection of tax by the authority (which is clearly not consideration for a supply by the tax authority) has been blurred. The judgment possibly calls into question the UK’s approach to forced sales, although it is possible that the UK will treat the decision as confined to its facts. To discuss the case, or its implications, please contact Ben Tennant on 0121 695 5828.

Glenwood: Upper Tribunal decides that car exporter could not recover input tax
Car dealer franchise agreements frequently restrict dealers to local markets. Mr Boyce therefore established a business (Glenwood) to help UK dealers of prestige marques such as Porsche and Mercedes export cars to Singapore. By interposing "Named Purchasers" between the dealership and Glenwood, dealerships could show that they were not in breach of their franchise agreements. Unfortunately, this meant that the dealerships issued invoices to the Named Purchasers, and not to Glenwood. HMRC refused input tax recovery of £100,663, on the basis that the invoices were not addressed to Glenwood. The Upper Tribunal has now upheld that decision. According to the Upper Tribunal, the reason that Glenwood was unable to obtain the invoices in the correct name was not down to any defect in the UK's rules – it was simply a consequence of how Glenwood chose to structure its business. Therefore, even though it was accepted that the supply was to Glenwood, and the Named Purchasers were simply nominees, HMRC were entitled to deny input tax recovery. To discuss the case, please contact Aaron Bissett on 0113 292 1709.

Elbrook: Upper Tribunal dismisses HMRC’s appeal in relation to hardship application
A feature of VAT appeals is that disputed tax has to be paid before the appeal can be heard, unless payment would cause the taxpayer “hardship” - which is sometimes hard to define. In Elbrook, HMRC took the view that the taxpayer should have borrowed £771,430 to pay the disputed tax, either by maximising its existing loan facilities, or seeking additional finance against investment assets. The Upper Tribunal has rejected HMRC’s appeal, holding that seeking additional finance in this way would cause hardship. Additional complaints by HMRC about the quality of evidence provided by Elbrook, and delays which may have contributed to hardship, suggest a deteriorating relationship between the taxpayer and HMRC, but were also rejected by the Upper Tribunal. The decision is a reminder that, although hardship is rightly regarded as a difficult test to satisfy, it may nevertheless be appropriate to consider it when pursuing an appeal to the First-tier Tribunal. To discuss the case, please contact Anbreen Khan on 020 7007 0688.

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This publication has been written in general terms and therefore cannot be relied on to cover specific situations; application of the principles set out will depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any of the contents of this publication. Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific circumstances. Deloitte LLP accepts no duty of care or 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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