Erica Rees is a Professional Support Lawyer in the London Tax team. She is responsible for overseeing the team’s knowledge management and training functions, as well as generally supporting the team on all aspects of their corporate tax work. Erica previously trained and practiced as a senior tax lawyer in the Weil London office, in which capacity she advised clients on a broad range of matters spanning multiple sectors, with a particular expertise in the tax aspects of financing large-scale private equity and corporate transactions.
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The recent case of Wilkinson v HMRC involves a commonplace scenario in corporate transactions, where shares in a target entity are often sold in exchange for some combination of cash, shares and/or loan notes issued by the buyer or a member of the buyer’s group. The issue of non-cash consideration can serve a commercial purpose: for example, by keeping a seller invested in the relevant company, thus incentivising their personal interest in the company’s success. There may also be tax considerations, including the sellers availing of “rollover relief”, and these were the focus of the First-tier Tribunal’s (FTT’s) decision in Wilkinson,where the FTT concluded that avoidance of liability to capital gains tax (CGT) was not a main purpose of the transaction. The case highlights the fact-specific nature of applying anti-avoidance provisions, demonstrating in particular that the way in which an “arrangement” is defined may have a significant impact on the ascertainment of its purpose.
The UK Government has launched a call for evidence into the long-term fiscal regime for oil and gas, which can be found here. The call for evidence outlines the features of the existing regime, which comprises ring fence corporation tax, supplementary charge, petroleum revenue tax and energy profits levy, and highlights the various reliefs available
On 11 July 2023, the Finance (No. 2) Bill 2023, also known as the Spring Finance Bill 2023, received Royal Assent. The bill has now officially become the Finance (No. 2) Act 2023. Amongst other things, the Act includes extensive legislation for implementing the OECD Pillar 2 (global minimum 15% tax) framework in the UK, including both a multinational top-up tax and domestic top-up tax that will have effect for in-scope entities for accounting periods beginning on or after 31 December 2023.
On 9 June 2023, in a measure entitled the “Energy Security Investment Mechanism” (link), the Government announced that the energy profits levy (“EPL”) will be switched off if prices fall to historically normal levels. Based on 20-year averages, normal levels would be achieved where both average oil and gas prices fall to, or below, $71.40 per barrel for oil and £0.54 per therm for gas, for two consecutive quarters. The rate of the EPL is 35%, resulting in a current headline rate of 75%. If it is switched off, the usual 40% rate (ring fence corporation tax and supplementary charge) to oil and gas profits will still apply.
As announced in Spring Budget 2023, the government is considering further measures to combat tax avoidance (see News brief “Spring Budget 2023: enterprise, everywhere, all at once”, www.practicallaw.com/w-038-9571). True to its word, on 27 April 2023, it launched a consultation on tougher consequences for promoters of tax avoidance, which includes two key proposals: The government