08 May 2020
Mike Lane and Zoe Andrews examine the decision in Union Castle and whether an accounting debit is a loss for tax purposes; the HMRC consultation on tax changes required as a result of the withdrawal of LIBOR; and the tax implications raised by COVID-19 for tax residence, continuity of trade and the stamping of documents.
The Court of Appeal in Union Castle decides that an accounting debit linked to the derecognition of derivative contracts is not a loss ‘arising from’ the derivative contracts for the purposes of corporation tax and, as obiter, that it does not ‘fairly represent’ a loss. HMRC publishes draft guidance on the main tax impacts for businesses of changes to financial instruments in the light of the withdrawal of LIBOR and other benchmark rates. COVID-19 raises some interesting tax implications, such as the impact of travel restrictions on tax residence and permanent establishment and whether lockdown can result in a cessation/change of trade; it also prompts the Stamp Office to (temporarily) accept electronic submission of documents for stamping. HMRC consults on further tweaks to the hybrids rules.
This article was first published in the 8 May 2020 edition of Tax Journal.
This material is provided for general information only. It does not constitute legal or other professional advice.
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