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Tax news in brief


Published: 16 Jun 2021 Update History

Highlights from the broader tax news week ending 16 June, which includes: G7 leaders backing global tax commitment; a word of caution on deeds of assignment; guidance on tax avoidance using unfunded pension arrangements; VAT liability of daycare services; and more support on heritage assets.

ICAEW welcomes G7 leaders’ support on global tax goals

At the close of the G7 summit on 13 June 2021, the leaders of G7 countries committed to “reaching an equitable solution on the allocation of taxing rights”. The move supports the agreement between the G7 finance ministers, published on 5 June, which pledges “a global minimum tax of at least 15% on a country-by-country basis”. ICAEW welcomed the leaders’ commitment and support while reaffirming that a lot of detail is yet to be worked through and understood. “It remains to be seen if a wider agreement at the G20/OECD can be reached given the conflicting interests and priorities of individual countries,” confirmed Frank Haskew, ICAEW Head of Tax. 

Deeds of assignment – a word of caution

An ICAEW member recently reported that a client had inadvertently signed a deed of assignment which was included in paperwork relating to a payment protection insurance reclaim. This led to tax repayments being made to the refund claims company rather than the client and the repayments later turned out to have been incorrect, with HMRC demanding repayment by the client. Deeds of assignment are different from nominating a repayment to be made to a third party and can only be revoked by agreement with the third party. Further information on deeds of assignment made to tax refund companies is available on the Low Incomes Tax Reform Group website

Tax avoidance using unfunded pension arrangements

HMRC has published Spotlight 58 on disguised remuneration: tax avoidance using unfunded pension arrangements. These arrangements are being used by some owner-managed companies and their directors to reward directors for services provided to the company in a way that seeks to avoid an immediate income tax and NIC charge while obtaining corporation tax relief. HMRC is challenging these schemes as it believes that they do not give rise to the tax savings promised by their promoters. Find out more about the arrangements.

VAT liability of daycare services

Following the Court of Appeal’s judgment in the joint appeals of L.I.F.E. Services and The Learning Centre (Romford) [2020] EWCA Civ 452, HMRC has issued Revenue and Customs Brief 9 (2021): VAT liability of daycare services supplied by private bodies in England and Wales. The supply of welfare services by a charity, or a state-regulated private welfare institution or agency, is exempt from VAT under Item 9 of Group 7 of Schedule 9 to the VAT Act 1994. Unlike England and Wales, private daycare services in Scotland and Northern Ireland are state regulated and can benefit from the exemption.

The Brief sets out that private providers of daycare services in England and Wales who are not charities should account for VAT on these services with immediate effect and also correct past errors. HMRC will also be contacting those care providers with appeals stood behind this case to ask whether they intend to proceed with their appeals in the light of the judgment. Read the Brief in full.

More support on heritage assets

Heritage assets (including buildings, land, works of art and other objects) are exempt from inheritance tax and capital gains tax provided certain conditions are met, including allowing public access to view them. HMRC has published guidance on the easements in place during the coronavirus pandemic, which vary depending on the nature of the asset and form of access (for example, appointment only). Guidance for visitors has also been updated to reflect that normal access arrangements may change owing to coronavirus restrictions.

Hear more at Virtually Live!

ICAEW's flagship digital conference returns for 2021 and includes sessions on tax. Hear from experts including Rebecca Benneyworth and ICAEW's Anita Monteith.

ICAEW's flagship digital conference returns for 2021. Virtually Live will be held on 15-17 June 2021
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