The Corporate Interest Restriction (“CIR”) rules, which came into force on 1 April 2017, limit the net financing costs which a group can deduct against its UK taxable income. The rules apply to interest and amounts economically equivalent to interest, which are referred to as “tax-interest” in the legislation. Tax-interest includes the financing costs of … Continue reading Corporate Interest Restriction Rules & IFRS 16 Leases
The International Accounting Standards Board’s new international accounting standard on leases, IFRS 16 Leases (“IFRS 16”), will shortly be coming into force in respect of periods of account beginning on or after 1 January 2019. For lessees, the new standard has important implications, bringing most leases on-balance sheet, while eliminating the dichotomy between finance leases … Continue reading UK Tax Changes in Response to New Lease Accounting Standard (IFRS 16 Leases)
Today we had the Chancellor’s first Spring Statement since the decision to move the Budget to the Autumn. The Chancellor took pains to manage expectations downwards but, while there were no major tax announcements for the new financial year, there were some interesting consultations launched and updates on earlier consultations. Entrepreneurs’ Relief (ER) ER provides … Continue reading The Spring Statement: What’s new?
HM Treasury has published a position paper in respect of taxing the digital economy (available here) following the Chancellor’s Autumn Budget. The paper proposes that multinational groups’ profits should be taxed where value is generated. For example, a social media business generates value through users worldwide, but is only taxed where it is tax resident … Continue reading Taxing the Digital Economy: first steps by the UK
The UK’s Substantial Shareholdings Exemption (“SSE”) will be extended from April 2017. The main beneficiaries will be investment companies selling shareholdings of 10% or more in trading companies and companies owned by institutional investors which are themselves exempt from UK tax on capital gains The SSE was introduced in 2002 to permit trading groups to … Continue reading Substantial Shareholdings Exemption to be extended
As a result of conflicting decisions in two recent tax cases, there is uncertainty as to the impact of deferred shares (and other shares with no dividend rights) on shareholder tax reliefs, in particular entrepreneurs’ relief for individuals and group reliefs for corporate shareholders. The issue is whether these shares are “ordinary share capital” for tax … Continue reading Deferred shares: impact on entrepreneurs’ relief and group relief
The Chancellor today abolished the corporation tax deduction on the amortisation of goodwill that has been acquired as part of a business purchase. This change will have a material impact on the economics of business acquisitions, where the tax deduction on acquired goodwill has been a major driver in businesses being acquired by way of an … Continue reading A lack of goodwill
Today’s budget included the stamping out of various techniques (known as “refreshing” arrangements) that allow companies to use certain types of brought forward losses which might otherwise not be used (sometimes described as being “trapped”). The losses in question are trading losses, non-trading loan relationship deficits (interest expenditure) and management expenses which, in each case, … Continue reading A more straight forward rule would have been refreshing
When the Finance Bill 2015 receives Royal Assent in the next few weeks it will contain enabling legislation to usher in prescriptive documentation requirements for approximately 1,400 of the largest multi-national enterprises (“MNEs”) with a UK parent. The enabling legislation will give HM Treasury the power to make regulations via statutory instrument to implement the final recommendations for country-by-country … Continue reading Country-by-country, year by year – the compliance burden is increasing!
For companies now subject to investigation from an EU State Aid perspective, the potential for repayment obligations are likely to be an unexpected outcome from what many may have regarded as mainstream tax structuring. An outline of the current position is available here.