WHEN THE PARTIES WANT AN AGREEMENT TO DISAPPEAR: THE US TAX RESCISSION DOCTRINE
By Eric Ryan and Joe Helm
The old saw about the best-laid plans of mice and men also goes for international tax planning and transactions with significant tax consequences.
Sometimes the business and/or financial assumptions around the planning turn out to be mistaken, sometimes the resulting structure turns out to be too complex to manage relative to the savings it produces, and sometimes parties just mutually decide to back out of a deal after some or all of its parts have been executed. What is to be done when the consequences of such a transaction or set of transactions might create undesirable commercial or tax effects?
Most of the time, the answer is, unfortunately: not much.
There is, however, an important exception to the ordinarily steep hurdles for unwinding a transaction back to the beginning for US tax purposes: the rescission doctrine.
Find out more.
DPAS LIMITED V HMRC: IN THE UK, VAT PLANNING LIVES ON
By Richard Woolich and Jonathan Gordon
In the UK, VAT planning lives on. Most recently, we are looking at the outcome of DPAS Limited v HMRC.
DPAS Limited, which administers dental treatment plans, found, following the AXA decision, that it was liable to charge VAT on its services. To avoid charging VAT, DPAS restructured its contracts with its clients who were dentists so that its payment services were provided to the patients themselves.
In the DPAS Limited v HMRC decision, the court held that DPAS Limited’s supply of payment services to the patients directly could not be a taxable supply of debt collection services, since the patients were not creditors to whom the payments were owed. Instead, the court found that the supplies were “transactions concerning payments” which were exempt from VAT.
The court also held that the taxpayer’s restructuring of its business with the purpose of avoiding a VAT disadvantage was not abusive.
Find out more about these findings, which may affect your VAT planning.
SPANISH SUPREME COURT: DOMESTIC DOUBLE TAXATION RELIEF FOR CAPITAL GAINS ON DISPOSAL OF SHARES IN SPANISH ENTITIES
By Carlos Rodríguez and Miguel Baz
Following the non-discrimination principle, the Spanish Supreme Court has applied a tax credit to avoid double taxation to capital gains derived by EU resident entities from the transfer of shares in Spanish entities.
Find out more.