HMRC is liaising with tax professionals over clearance changes concerns, such as missed deadlines and misunderstandings of the commercial drivers for business transactions.

Applying for statutory clearance in preparation for a company reorganisation, restructure or demerger can be a viable and useful option for business owners to know how the transaction will be treated in relation to tax.

However, around two years ago, HMRC’s unit for these matters was relocated from London to Birmingham, with a new team put in place. Since then, HMRC’s 30-day deadline to respond to clearance applications has frequently been missed, with some clearances taking up to six months in cases where the unit has asked for more information.

Furthermore, clients have faced challenges in regards to HMRC misunderstanding or misinterpreting the ‘commercial reasons’ statutory test – leading to cases having to go to a tribunal  for a resolution. Magma was involved in this very scenario earlier this year, with Magma winning the tribunal and HMRC being overruled – you can read more about that here.

Progress to find solutions to these issues now appears to be gaining traction, with discussions taking place between HMRC and the Chartered Institute of Taxation (CIOT) to help HMRC better understand the commercial drivers for business transactions.

Get in touch

Magma’s tax team are well versed in both business restructurings and in handling HMRC. A practical and commercial approach, coupled with deep technical understanding and some real tenacity, is a great recipe for results. To find out more, please contact our tax team on 01788 53900 or 0116 261 0061.


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