Tax News Daily
The latest tax news from around the world, summarised and tagged for tax professionals. Updated twice daily.
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A Debit Entry in a Client Account Does Not Constitute Receipt for VAT Purposes
A tax ruling or court decision has determined that a debit entry made in a client account does not constitute receipt of payment for VAT purposes. This has significant implications for businesses, particularly those in professional services or financial sectors, where funds may be recorded in client accounts before actual transfer. The decision clarifies the VAT tax point rules around payment receipt, meaning VAT may not become due at the point of a debit entry, potentially affecting cash accounting, VAT return timing, and compliance obligations for affected businesses.
Right to Deduct VAT and Compliance with Formal Conditions
This article addresses the right to deduct input VAT and the importance of compliance with formal conditions required by tax authorities. It examines the legal framework governing VAT deduction rights, exploring how businesses can defend their entitlement to reclaim VAT even when formal documentary or procedural requirements have not been perfectly met. The analysis likely references EU VAT Directive principles and relevant case law establishing that substantive rights to deduction should not be denied solely on formal grounds, provided the underlying transaction is genuine. Businesses facing VAT deduction disputes will find guidance on asserting their rights.
Check when you can expect a reply from HMRC
HMRC has published guidance outlining expected response times for various taxpayer queries and correspondence. The guide helps individuals and businesses understand how long they should wait before following up on submissions, claims, and other tax-related communications with the UK tax authority. It covers response timeframes across multiple tax types and service channels, providing transparency on HMRC's processing timelines. This is a practical administrative resource for taxpayers managing deadlines and planning around HMRC interactions, relevant to personal and business tax compliance in the United Kingdom.
Tax Notes: Soroban Gets Cool Reception on Limited Partner Argument
A Tax Notes report covers the Soroban Capital Partners case, where the court gave a cool reception to the fund's argument that its limited partners should be exempt from self-employment taxes under the limited partner exception. The case tests the boundaries of who qualifies as a limited partner for payroll/self-employment tax purposes, a hotly contested issue for hedge funds and investment partnerships. The court's skeptical stance could have broad implications for fund managers and limited partners seeking to shield income from self-employment taxes, reinforcing IRS positions on active participation in partnership structures.
Gujarat AAR: No GST on Compensation for Loss or Damage to Goods Recovered from Transporters
The Gujarat Authority for Advance Rulings (AAR) has ruled that GST does not apply to compensation received for loss or damage to goods recovered from transporters. The ruling clarifies that such compensation payments are not consideration for a supply of goods or services, meaning they fall outside the GST levy. This is significant for businesses that recover amounts from logistics providers when goods are damaged or lost in transit, providing clarity that these receipts will not attract GST liability and do not require the recipient to raise a tax invoice or reverse any input tax credit.
Assessment in the Name of a Deceased Person Is a Nullity: ITAT Allows Legal Ground Even If Not Raised Before CIT(A)
India's Income Tax Appellate Tribunal (ITAT) ruled that a tax assessment issued in the name of a deceased person is legally void and constitutes a nullity. Notably, the tribunal permitted this jurisdictional legal ground to be raised for the first time at the appellate stage, even though it had not been argued before the Commissioner of Income Tax (Appeals). The ruling reinforces the principle that procedural defects of a fundamental nature — such as assessing a person who is legally dead — can be challenged at any stage of proceedings, providing important protections for legal heirs and estates.
Govt Extends GSTAT Appeal Filing Deadline to July 31 Amid Surge in Portal Filings
The Indian government has extended the deadline for filing appeals before the GST Appellate Tribunal (GSTAT) to July 31, citing a significant surge in filings on the official portal. The extension provides taxpayers and businesses additional time to prepare and submit their appeals without facing procedural lapses. GSTAT, the dedicated appellate body for GST disputes, has seen high demand since becoming operational, reflecting the volume of unresolved GST controversies across India. The deadline relief is intended to ease portal congestion and ensure taxpayers are not prejudiced by technical or administrative bottlenecks during the filing process.
Priority for Tax Claims Restored in Restructuring
A jurisdiction has restored the priority status of tax claims in restructuring and insolvency proceedings, reversing previous reforms that had subordinated or equalised tax debts with other creditor claims. The reinstatement means that tax authorities will again rank higher than unsecured commercial creditors when assets are distributed during restructuring processes. This change has significant implications for businesses undergoing financial reorganisation, lenders assessing credit risk, and insolvency practitioners managing creditor hierarchies. The policy shift reflects governments prioritising revenue recovery and reinforcing the preferential standing of public fiscal claims in insolvency law.
Life Sciences and the R&D Tax Credit: Why Documentation Matters
This article examines the importance of proper documentation for life sciences companies claiming the R&D tax credit in the US. It highlights that while life sciences firms are well-positioned to qualify due to their research-intensive activities, the IRS increasingly scrutinizes these claims. Key documentation requirements include contemporaneous records of qualified research expenses, employee time tracking, contractor agreements, and evidence of the four-part test satisfaction. Poor documentation is the primary reason credits are disallowed during audits. The article advises companies to maintain systematic records throughout the year rather than reconstructing documentation retrospectively at filing time.
IRS seeks examples of incorrect CP53E notices
The IRS is soliciting examples of incorrect CP53E notices from taxpayers and practitioners. CP53E notices are issued when the IRS is unable to process electronic payments, potentially causing confusion or erroneous liability communications. By gathering real-world cases of erroneous notices, the IRS aims to identify systemic issues in its notice generation process and improve accuracy. This initiative reflects ongoing efforts to enhance taxpayer communication and reduce unnecessary burden from incorrect correspondence. Tax professionals are encouraged to submit documented examples to help the agency diagnose and correct the underlying problems causing these faulty notices.
IRS seeks examples of incorrect CP53E notices
The IRS is soliciting examples of incorrect CP53E notices from taxpayers and practitioners. CP53E notices are issued when the IRS is unable to process a payment made via direct debit or electronic funds transfer. Errors in these notices can cause confusion and undue burden for recipients who have actually made successful payments. By gathering real-world examples of erroneous notices, the IRS aims to identify systemic issues and improve the accuracy of its correspondence. Tax professionals are encouraged to submit documented cases to help the agency diagnose and correct the underlying problems generating these faulty notifications.
CRA Agents Answer Only 17% of Tax Questions Accurately: What Canadian Taxpayers Must Know About the Auditor General and Ombudsperson Reports
Canada's Auditor General and Ombudsperson reports reveal alarming deficiencies in the Canada Revenue Agency's taxpayer services, with CRA agents correctly answering only 17% of tax questions. The reports highlight systemic failures in taxpayer assistance, including long wait times, incorrect guidance, and inadequate support for Canadians navigating complex tax obligations. These findings raise serious concerns about CRA's accountability and the reliability of official tax advice. Canadian taxpayers are urged to seek professional tax counsel rather than relying solely on CRA helplines, and the reports call for significant reforms to improve service quality and taxpayer rights protection.
Sales tax advice for the second half of the year from former state auditors
Former state auditors offer sales tax compliance advice for businesses heading into the second half of the year. Drawing on their audit experience, the experts highlight common pitfalls such as nexus miscalculations, exemption certificate management, and filing errors that frequently trigger audits. The guidance covers proactive steps businesses should take to review their sales tax obligations, ensure accurate record-keeping, and address any gaps before year-end. The advice is particularly relevant for e-commerce and multi-state sellers navigating complex US sales tax rules following the South Dakota v. Wayfair decision.
European Court T-284/26 (Cerealcom Dolj) – Questions – VAT Interest Proportionality When Counterparty Already Paid VAT
A new case, T-284/26 (Cerealcom Dolj), has been referred to the European General Court raising questions about the proportionality of VAT interest charges where the counterparty in a transaction has already paid the disputed VAT to tax authorities. The case addresses a fundamental fairness question: whether it is proportionate to impose interest on a taxpayer when the state has already received the VAT from the other party, suffering no actual fiscal loss. The outcome could have significant implications for VAT interest and penalty regimes across EU member states.
Bombay HC: GST Show Cause Notice to Merged Company Is Legally Invalid
The Bombay High Court ruled that a GST show cause notice issued to a company that had already been merged into another entity is legally invalid. The court held that once a merger is complete, the merged company ceases to exist as a separate legal entity, making any notice directed at it void ab initio. This ruling has significant implications for GST enforcement proceedings involving corporate restructurings, as tax authorities must direct notices to the surviving or successor entity rather than the defunct merged company.
Clients Who Wait for a Financial Audit Notice Pay Far More Than the Engagement Fee
A financial advisory article warns that clients who delay proactive tax and financial planning until they receive an audit notice end up paying significantly more than the cost of an engagement fee. The piece highlights that reactive responses to IRS or financial audits involve greater professional fees, penalties, and interest compared to preventive compliance work. It encourages individuals and businesses to invest in upfront tax planning and audit readiness rather than waiting for enforcement action, framing early engagement as a cost-effective risk management strategy.
GST: DGTS and ICMAI Organise Webinar on Best Practices for GSTAT Appeals
The Directorate General of Taxpayer Services (DGTS) and the Institute of Cost Accountants of India (ICMAI) jointly organised a webinar focused on best practices for filing appeals before the GST Appellate Tribunal (GSTAT). The session aimed to educate taxpayers and practitioners on procedural requirements, documentation standards, and effective strategies for navigating GSTAT proceedings. The webinar reflects ongoing efforts to improve taxpayer awareness and compliance as the GSTAT begins handling GST disputes across India.
No Automatic ITC Denial Over Supplier’s Retrospective GST Cancellation: Madras HC
The Madras High Court has ruled that input tax credit (ITC) cannot be automatically denied to a buyer solely because their supplier's GST registration was retrospectively cancelled. The court held that a purchaser who acted in good faith and completed valid transactions during the period when the supplier appeared registered should not be penalised for the supplier's subsequent registration cancellation. The judgment reinforces the principle that ITC eligibility must be assessed on the merits of the transaction rather than on retrospective administrative actions against suppliers, offering important protection to bona fide taxpayers under India's GST framework.
Karnataka HC Quashes a Single-Judge Order Directing the State to Pay Contractor’s GST Dues
The Karnataka High Court's division bench quashed a single-judge order that had directed the state government to pay GST dues on behalf of a contractor. The division bench found the lower court's direction legally untenable, ruling that the state cannot be compelled to bear a contractor's GST liability in this manner. The case highlights disputes over contractual GST obligations between government bodies and contractors, and clarifies the limits of judicial intervention in directing state payment of third-party tax liabilities.
Can Penalty for Concealment Survive If Income Declared in Return Filed Under Section 148 Is Accepted? ITAT Chennai Says No
The Income Tax Appellate Tribunal (ITAT) Chennai ruled that a penalty for concealment of income cannot survive when the income declared in a return filed under Section 148 (reassessment notice) is accepted by tax authorities. The case examines whether concealment penalties under Section 271(1)(c) of the Income Tax Act are valid if the assessee voluntarily discloses income in response to a reassessment notice and that disclosure is accepted without dispute. ITAT Chennai concluded that acceptance of the declared income negates the basis for imposing a concealment penalty, providing significant relief to taxpayers facing reassessment proceedings in India.
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