In the last week the Office for Tax Simplification (OTS) issued a number of reports following consultations on various tax simplification issues.
If their recommendations are subsequently followed by legislation, the changes will impact the work presently undertaken by tax advisors. The main topics covered, and the report links are summarised below:
- Simplification of corporation tax returns and computations especially for smaller concerns – https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/624328/CT_Review_-_final_report_June_17_web.pdf
- Depreciation v capital allowances – https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/716304/Accounting_depreciation_or_capital_allowances_web.pdf
- Lookthrough taxation – https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/564577/Lookthrough_paper_-_final.pdf
- More on the closer alignment of income tax and National Insurance – https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/567491/OTS_report_web_final.pdf
- The creation of a sole enterprise structure with protected assets – https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/563407/SEPA_final_report_271016.pdf
All bar one have varying degrees of merit, although practitioners will no doubt be pleased that the notion of “lookthrough taxation” where the shareholders are taxed on company profits at Income Tax and NIC rates, not Corporation Tax, has been abandoned as unworkable. If enabled, that policy change would have nobbled the well-used strategy of sheltering profits at the lower CT rates in a limited company structure.
The OTS does seem to be functioning as part of the Treasury’s trickle down approach to implementing change in UK taxation. The recent OTS press releases provide an interesting window into the future. Of course, it remains to be seen if any will find their way into law as our government seems to have its hands full dealing with the demands of Brexit.