Irish Bank Resolution Corporation Limited vs HMRC [2017] UKFTT 702

Multinational banks often trade through branches, which equate to 'permanent establishments' ('PEs') under tax law. 

The branch will often be allocated some level of capital backing with which it can offer banking services (i.e. deposit taking or lending). Regulated banks are required to keep around 10-15% of 'regulatory capital' in relation to their loan portfolio, meaning that for every £100 they lend, they must have £10-15 of assets in reserve.

Bank branches might be fully funded via loans from their head office, or they might be funded with 10-15% of equity - it will depend on the local regulations and the bank's operations policy.

Where a branch is funded with 100% debt, as opposed to 85% debt and 15% equity - its interest payments to head office will be proportionately higher than interest payments of comparable branches which are funded with 10-15% of equity. Where interest payments are higher, tax deductions are higher for the branch and therefore its taxable income would be lower. While it's true that the taxable income of the head office will be higher and therefore there is no net advantage governments generally want their share of the branch's taxable income.

Archer vs HMRC [2017] EWHC 296

The impact of defects on HMRC Closure Notices

Section 114 of the Taxes Management Act 1970 provides that an action taken in pursuance of any provision of the tax acts cannot be invalidated on the basis of a mistake or defect. The High Court has used this provision to rule that a Closure Notice which failed to specify the amount of tax due, was still valid if the taxpayer receiving it could have easily calculated the tax payable at the time.

Whether or not a person is able to calculate tax due on their account would be determined according to the ordinary principles of law.