Public takeovers

Public takeovers

STOP PRESS relating to chargeable gains anti-avoidance provision: Clauses 37 and 38 of Finance Bill 2026 (as introduced) amend the anti-avoidance rules that apply to share for share exchanges and schemes of reconstruction. In relation to the shareholder tax reliefs pertaining to a share exchange (TCGA 1992, s 135), the amended rules will, once the Finance Bill receives Royal Assent, have effect in relation to arrangements involving an issue of shares in, or debentures of, a company on or after 26 November 2025. Note, however, that the changes made by Finance Bill 2026 do not apply where (i) a company has made an application under TCGA 1992, s 138(1) before 26 November 2025, (ii) HMRC, or the Tribunal, has notified the company that the application has been approved, and (iii) the issue of shares or debentures occurs before 26 January 2026 or, if later, within 60 days of the company receiving approval of the clearance. HMRC has published interim guidance on the new rules and the clearance procedure at CG-App19. For more information about the new anti-avoidance rule, see News Analysis:

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Latest Tax News

Tax weekly highlights—5 March 2026

This week's edition of Tax weekly highlights includes: (1) confirmation that the Spring Forecast did not make any tax announcements, (2) updates on the final stages of, and various government amendments to, the Finance Bill 2026, (3) the FTT in Aspire in the Community allowing pre-registration input tax recovery, (4) News Analyses being published on the UT’s decision in UK Care No 1 partly allowing the appeal but upholding the disallowance of the compensatory element of an early redemption premium on loan notes under the loan relationships imported loss rule and the FTT’s decision in Outram on setting aside discovery assessments, and (5) two new LBTT reliefs.

UT partly allows appeal but upholds disallowance of the compensatory element of an early redemption premium on loan notes under the loan relationships imported loss rule (UK Care No 1 Ltd v HMRC)

Tax analysis: In UK Care No 1 Ltd, the Upper Tribunal (UT) allowed the appeal of the appellant company (UKC1) in part. It considered section 327 of the Corporation Tax Act 2009 (CTA 2009), which provides for the disallowance of 'imported losses' (ie losses arising while the company is not within the UK tax net) under the loan relationships regime. The case concerned an early redemption of loan notes. The UT held that CTA 2009, s 327 can apply to a ‘loss’ which includes expenses, and it upheld the disallowance of the compensatory (non-penalty) element of an early redemption premium as an imported loss; however, it allowed relief for the unamortised issue costs and issue discount as referable to the post-migration period.

FTT sets aside discovery assessments for being out of time because inaccuracy was not deliberate (Outram and another v HMRC)

Tax analysis: In Outram and another v HMRC, the First-tier Tax Tribunal (FTT) allowed the taxpayers’ appeals against discovery assessments issued to disallow trading losses claimed under an ineffective avoidance scheme. The FTT found that the assessments, which relied on deliberate behaviour, were out of time.

FTT allows recovery of pre-registration input tax by reference to post-registration use (Aspire in the Community Services Ltd v HMRC)

Tax analysis: In Aspire in the Community Services Ltd v HMRC, the First-tier Tax Tribunal (FTT) decided that, when HMRC allows a partly exempt person to treat as input tax VAT on costs incurred before the effective date of VAT registration (EDR), it is how the costs are used after the EDR which matter because that is the effect of the statutory legislation.