Finance Bill Amendments – Impact on Alphatax UK Spring 2017 Edition
The government made the decision during the committee stage on 25th April to remove the majority of clauses from Finance Bill 2017. This was a consequence of the call for a snap general election, which necessitates the current Parliament being dissolved in early May. The key clauses removed from the Finance Bill include all corporation tax measures – including Carried forward loss relief and Interest deductibility – and those relating to Making Tax Digital. Tax commentators have welcomed the news that the these significant changes are not being rushed through, and have noted that their deferral will allow time for an appropriate level of consideration in Parliament.
During the last few months our tax development team has been heavily focused on implementing the complex changes required to support the proposed rules for both carried forward loss relief and interest deductibility, with a view to including these changes in the Alphatax UK Spring 2017 edition. The provisions were due to apply from 1 April 2017, with the loss changes allowing greater flexibility over the profits against which carried forward losses may be set, whilst at the same time restricting relief to broadly 50% of profits. The interest changes meanwhile were due to apply a percentage based limit on the amount of tax-interest expense that a company could deduct under the loan relationship rules.
Following the Government’s decision to remove the clauses from the Finance Bill, it is no longer appropriate for us to include these changes in the Alphatax UK Spring 2017 edition. Therefore we are now currently evaluating what this means for our plans for the timing and content of this software release, and will provide further details in the near future.
The expectation from commentators – such as the CIOT – is that these clauses will be re-introduced following the election, regardless of the result. The timeframe for any further Finance Bills this year will only become clear in the coming months.
In respect of the Making Tax Digital project, the clauses removed from the Finance Bill related to returns for income tax and VAT only. As such, the position for corporation tax is currently unchanged, and our expectation is that the project will proceed according to the timetable previously outlined. We therefore intend to continue preparing our customers for the transition to the new MTD regime as before.
Do get in touch should you have any questions on these topics. You can reach us on 01784 410 369 and or by email.