Tax Matters Digest

To go straight to the articles in the latest edition please scroll down and expand the section/s below that are of interest to you. For a preview of these articles, read the introduction to the latest edition from Sharon Baynham here:

Just as we were going to press the Prime Minister has announced that the General Election will be held on 4 July 2024. Previously, the expectation had been for an Autumn election with a prior fiscal announcement, potentially including another big tax giveaway. But with good news on inflation and evidently no fiscal headroom for the hoped-for tax cuts, the case for holding off until Autumn seems to have disappeared.

As the main political parties gear up for 4 July we can expect to see manifestos land in the next few weeks. We will keep you up to date with tax announcements from the main parties as well as our planned activities. Please reach out to your regular KPMG contact if you have any questions.

In the meantime, the tax world continues turning and our main articles this week have an international flavour.

Our Family Office & Private Client team channel their inner Donald Rumsfeld in our spotlight article as they discuss the ‘known unknowns’ of the Government’s planned non-dom reforms. The article is a must-read for non-doms and those businesses that employ globally mobile individuals.

HMRC have issued guidance on how in-scope multinational groups should register for the UK’s Pillar Two regime. Registration is required within six months from the end of the first accounting period that started on or after 31 December 2023, using HMRC’s on-line service. This is the first step from HMRC as part of ‘going live’ with their Top-up Taxes online service. Pillar Two becomes more real as the months pass and those businesses that have yet to grasp the nettle in understanding the impact of Pillar Two on their business need to do so quickly.

We also include a link to the KPMG EU Tax Centre’s recent Euro Tax Flash which offers a comprehensive analysis of the latest developments in relation to the FASTER directive, intended to allow faster and safer relief for excess withholding tax. In the last few weeks the Economic and Financial Affairs Council of the EU (ECOFIN) has reached agreement on the wording of the proposals. The agreed compromise text has some changes from the original version which are discussed in the article. Member States have until the end of 2028 to transpose the Directive into domestic law, with the rules applying from 1 January 2030. 

In case law developments we include an article on the judgment handed down by the First-tier Tribunal in Flame Tree Publishing Ltd v HMRC. The judgment is a salutary reminder of the rigor needed in preparing R&D tax incentives in terms of both process and documentation in order to meet HMRC’s standards.

For those of you that love all things tax administration, then you will enjoy our article highlighting the key themes of our response to HMRC’s consultation on reforms to enquiry and assessment powers, penalties and safeguards. We also provide our regular roundup of developments in the indirect tax world with links to recent issues of Indirect Tax Talking Points, as well as a roundup of other news from the UK and further afield in Other News In Brief and Week In Tax.

Finally, if you want to horizon scan then kick back with a coffee and Tim Sarson’s City AM article which ponders where tax rises might come from in the future.