Midweek Tax News

HMRC has advised that it expects “Legislation Day”, when the Government will publish draft clauses for the next Finance Bill, will take place before 16 July 2026, when parliamentary recess begins.

A written ministerial statement will be issued by Dan Tomlinson, the Exchequer Secretary to the Treasury, with accompanying documentation being published on GOV.UK.

There is no certainty as to the legislation that will be released on the day, and some clauses intended for Finance Bill 2026/27 may be released later. However, we expect to see the legislation for the shares transfer charge (which replaces stamp duty and SDRT) as well as the legislation covering mandatory foreign branch exemption reform.

In the March 2026 judgment in Muller UK & Ireland Group LLP & Ors the Court of Appeal considered the acquisition of intangible assets and goodwill by a limited liability partnership (LLP) from its corporate members, each of which was a member of the same corporate group. It was common ground in this case that – in line with s1259(3) CTA 2009 – the taxable profits to be allocated to the members of the LLP should be determined based on their respective shares of the profits of the trade which would be chargeable to corporation tax “if a UK resident company carried on the trade”.

The key issue before the Court related to the interaction of s1259(3) with the intangible fixed assets regime (Part 8 CTA 2009), and specifically whether the assets (goodwill and intangible fixed assets in the hands of “a UK resident company”) were acquired by “a UK resident company” from a “related party” (defined for these purposes in s835 CTA 2009). If this were the case, then s882 CTA 2009 would prevent the assets from falling within the intangible fixed assets regime, meaning that no deduction for amortisation would be available in computing the profits of the trade of “a UK resident company”.

The Court of Appeal found in favour of HMRC, holding that the statutory fiction in s1259 CTA 2009 extends far enough to require attribution of the LLP’s ownership and control characteristics to the notional company when applying the intangible fixed assets regime. On that basis, the transfers of goodwill and other intangibles were from related parties, and the claimed amortisation deductions were not available. The taxpayer’s appeal was dismissed.

The Supreme Court has now denied permission to appeal in this case and so the Court of Appeal judgment is final. There are a number of enquiries where this point is relevant, and the Court of Appeal's approach to statutory deeming provisions may have implications beyond the intangible fixed assets regime. Please get in touch with your usual EY contact or Elyse Waller, whose details are below, for more thoughts about what the now final decision means.

The Supreme Court has released its decision in BlueCrest Capital Management (UK) LLP, the first Supreme Court case to consider the Salaried Member Rules (“SMR”). The SMR comprise a series of tests used to determine whether members (i.e. partners) of a UK LLP should be treated as employees for tax purposes. The rules were introduced as an anti-avoidance measure to prevent individuals being presented as LLP members where their role more closely resembles that of an employee.

The case arose after HMRC assessed BlueCrest for PAYE and NIC (including Employer’s NIC), arguing that many of its partners should be treated as employees under the SMR. For the rules to apply, all three statutory conditions must be met. The dispute focused on Conditions A and B, as Condition C was not relevant because the individuals had not contributed capital to the partnership.

Condition B requires that the mutual rights and duties of the members do not give a member significant influence over the affairs of the LLP. The First-tier Tribunal concluded that Condition B was not met, meaning the rules did not apply, and the Upper Tribunal upheld that decision.

The Court of Appeal, however, found that both Tribunals had erred in law. It held that the relevant “significant influence” must derive from “the mutual rights and duties of the members…and of the partnership and its members”. Influence that cannot be traced to an identifiable contractual or statutory source within those rights and duties is excluded for the purposes of Condition B. Although both BlueCrest and HMRC had accepted that actual (de facto) influence could be taken into account, the Court held that this approach was incorrect and remitted the case to the First-tier Tribunal for reconsideration of Condition B.

The Court of Appeal also confirmed that Condition A was met. This condition considers whether at least 80% of the amount paid by an LLP to a member is “disguised salary”. The key point was that, for Condition A not to apply, the variability in a member’s remuneration must be linked to the profits of the LLP itself rather than another profit measure, such as a sub-profit and loss account. Beyond this high-level observation, neither the Court of Appeal not the Supreme Court provided any further guidance on the point.

BlueCrest appealed to the Supreme Court who agreed with the Court of Appeal on both Condition A and Condition B. For Condition B, the key point focused on, the Supreme Court agreed that the key question was whether legally enforceable rights and duties, derived from governance instruments, delegated authority or a specific role within the LLP, give a member the necessary “significant influence over the affairs of the partnership”. Influence that cannot be traced to an identifiable contractual, statutory or other legal source is excluded, regardless of whether it arises through informal, de facto or external arrangements.

The Supreme Court also emphasised that “the affairs of a partnership” are broader than, but include, its business. It rejected the argument that significant influence arising from delegated responsibility for operational or day-to-day decisions within a particular part of the business was sufficient. In the Court’s view, influence over the profitability of one area of the business, even if substantial, does not amount to significant influence over the affairs of the LLP as a whole.

The Supreme Court therefore upheld the Court of Appeal’s decision. The question of whether Condition B applies to any of BlueCrest’s members will now return to the First-tier Tribunal.

The practical takeaway is that reviews of the SMR considering Condition B should focus less on economic importance or individual revenue generation and more on whether members have genuine, documented influence over the management and governance of the LLP as a whole. If you would like to discuss what the judgment means for your LLP structure, governance arrangements or member remuneration model, please get in touch with your usual EY contact or Richard Thomson, whose details are below.

In our webcast at 3.00pm today, 8 July, our Transfer Pricing specialists will unpack what the new International Controlled Transactions Schedule (ICTS) disclosure entails and what taxpayers can do to prepare.

During this 60-minute webcast, our panel will explore the new challenges raised by the ICTS and look at the finer detail including transaction and sector specifics, as well as considering the role of technology and AI in accelerating risk profiling and HMRC enquiries. We will also be analysing the expected timelines and practical steps businesses should take now.

You can register for the webcast using this link.

The Taxation (Energy and Vehicles) Bill 2026-27 has now completed all of its Commons stages. It is scheduled to have its second reading in the Lords, along with all of its remaining stages, on 14 July. The Bill is both a 'Supply Bill' and a 'Money Bill'. As such, the House of Lords cannot amend the Bill.

As a reminder, the Bill makes provision for three previously announced tax measures:

• The increase in the rate of the Electricity Generator Levy (EGL) from 45% to 55% from 1 July 2026
• An increase in the rate of Approved Mileage Allowance Payments (AMAPs) with effect from the start of the current tax year (2026/27)
• The introduction of a temporary 12-month Vehicle Excise Duty (VED) exemption for certain heavy goods vehicles (HGVs) to apply from 1 July 2026 and 30 June 2027

On 30 June, HMRC published new statutory guidance (Notice 3) covering Pillar Two top-up taxes and the submission of returns for Pillar 2 top-up taxes. The statutory guidance contains sections which have the force of law for the purposes of multinational top-up tax and domestic top-up tax.

The guidance addresses:

• Self-assessment return: The content of the submission, the method of submission and amendment to the self-assessment return
• Below-threshold notification: The content of the submission and the method of submission
• Overseas return notification: The content of the submission and the method of submission
• Information return: The content of the submission, the method of submission and amendment to the information return

On 2 July, HMRC published a 2026 progress update, setting out the progress it has made in the last twelve months against the HMRC Transformation Roadmap first launched in July 2025. The 2025 Transformation Roadmap outlined the Government’s vision to build a more efficient, modernised and automated tax and customs system, and set out a five-year programme for achieving this.

Among the key reforms noted are the first phase of Making Tax Digital (MTD) for Income Tax for sole traders and landlords with a qualifying income of above £50,000, enhancements to the HMRC app and achieving 80% of customer interactions through automated or digital self-serve channels in 2025 to 2026, compared with around 65% in 2020 to 2021.

While the update focuses primarily on steps taken to date, it also sets out useful information on HMRC’s future plans. These include:

• Publication of the Further Closing the Wealthy Tax Gap plan in Autumn 2026, setting out how it will improve compliance across the wealthy population.
• Publication of an e-invoicing roadmap at Budget 2026 that will set out the milestones to implementation in April 2029 and build on co-creation work taking place with industry representatives in 2026.
• Delivery of a reporting service ahead of the reporting deadline of 31 May 2027 to support Crypto Asset Service Providers to meet their legal requirements to report to HMRC using the OECD schema, and for the UK to exchange information with other participating jurisdictions by 30 September 2027.
• Delivery of the OECD schema changes announced in January 2026 to enable Financial Institution submissions ahead of the UK reporting deadline of 31 May 2027. This will enable Financial Institutions to meet updated Common Reporting Standard (CRS) and Foreign Account Tax Compliance Act (FATCA) requirements, and for the UK to exchange relevant data with other jurisdictions by 30 September 2027.

In the case of Skatteforvaltningen (The Danish Customs and Tax Administration) v MCML Ltd, the Supreme Court has considered the scope of the doctrine of issue estoppel and the circumstances in which it may arise. Issue estoppel prevents a party in litigation from raising an issue of law or fact which has been litigated and decided in previous proceedings between the same parties.

The judgment sets out the legal principles governing when an issue estoppel arises and notes that the scope of an issue estoppel is not to be “enlarged by inference, deduction, or argument based on the reasoning set out in the prior decision”. In this case, the Supreme Court drew a distinction between claims based on misrepresentations alleged to have been made negligently and new claims based on misrepresentations alleged to have been made fraudulently. The Supreme Court held that it was wrong to formulate the issue as covering all private law claims to recover tax refunds paid by SKAT based on applications conveying incorrect information.