Welcome to the latest edition of RPC's Tax Bites - providing monthly bite-sized updates from the tax world.

As always, if there are any areas you would like more information on (or if you have any questions or feedback), please let us know or get in touch with your usual RPC contact.

HMRC issues guidance on joint and several liability notices HMRC has updated its guidance on anti-avoidance legislation, which targets the use of corporate insolvency to avoid paying tax or penalties following evasion or avoidance. Those in control of the relevant company can now become personally liable for its tax debts.

Directors (including shadow directors) and other individuals connected to a company may be issued with joint and several liability notices for tax owed by the company. Under the Finance Act 2020, those in control of the company may become liable for its tax liabilities in the event of an insolvency, where the company has been involved in tax avoidance or evasion or has been issued with penalties for facilitating the same.

HMRC's guidance explains how this legislation works in practice, and offers examples of how the legislation would work in specific scenarios. Additionally, the guidance indicates how the provisions interact with other penalties and legislation, and outlines the safeguards in place.

Corporate re-domiciliation

The Department for Business, Energy and Industrial Strategy (BEIS) has published a consultation paper requesting views on the proposal to introduce a corporate re-domiciliation regime. The regime would enable foreign-incorporated companies to change their location of incorporation to the UK, whilst maintaining their legal identities as foreign corporate bodies.

Specifically, the BEIS is seeking views, by 7 January 2022, on:

  1. the advantage and demand for this regime;
  2. the appropriate eligibility criteria (currently the government is proposing that re-domiciliation would be available to all bodies corporate, so long as they are comparable with UK forms and have complied with all legal requirements for the transfer);
  3. insolvency issues and protections for creditors in the event that a company becomes insolvent after re-domicile;
  4. the merits of an outward re-domiciliation regime, and conditions for re-domiciliation; and
  5. any tax changes necessary to facilitate inward and outward re-domiciliation.

HMRC will not enforce the 30 day deadline for updating details on trusts registration service From October 2020, trustees and trust agents registered on the trusts registration service have had to update details relating to relevant trusts within 30 days of becoming aware of a change. The government is planning to legislate to increase the deadline to 90 days later this year.

In the meantime, HMRC has stated that it will not enforce the 30 day reporting requirement, despite the requirement continuing to apply until the legislation is amended.

HMRC issues 'nudge' letters for foreign tax credit relief

Following a recent briefing, HMRC has issued a new batch of 'nudge' letters encouraging taxpayers to contact HMRC where foreign tax credit relief may have been incorrectly claimed.

The letters were sent in November to taxpayers whom HMRC believes received foreign investment income in 2019/20 and claimed the wrong rate of foreign tax credit relief. Taxpayers will be asked to check the relevant article of the double tax treaty between the country in which their investment income arose and the UK and make any appropriate corrections to their return.

See our recent Alert on this subject for more details. Case reports