The ATT is disappointed that small companies will face extra administrative requirements as a result of the extension of the corporate income loss restriction (CILR) rules to carried forward capital losses from April 2020.1
In their response to an earlier consultation2 on this measure, the ATT had expressed concerns that the proposals could create additional compliance obligations for companies that would otherwise be financially unaffected by the changes. Suggestions to avoid this have not been adopted in the draft legislation and consultation response3 published by HMRC today (11 July 2019).
Jon Stride, Co-chair of the ATT’s Technical Steering Group, said:
“We do not want to see companies that should be unaffected by this restriction facing additional - and totally unnecessary - reporting requirements.
“Companies of all sizes, even those who are financially unaffected, already have compliance obligations under the corporate income loss restriction rules. We are disappointed that HMRC have not taken the opportunity that bringing capital losses into these rules presents to simplify compliance obligations, especially for those small and medium sized companies which are not their intended target.”
Notes for editors
- Under the proposed extension, companies will only be able to use carried forward capital or income losses to offset up to 50 per cent of those gains, subject to a single deductions allowance of up to £5 million per annum. Companies of any size looking to set off carried forward capital or income tax losses in a period will be required to provide certain information in their tax return, even if these amounts fall well below the level of their deductions allowance.
- The ATT’s response can be found here. In the response, the ATT urges that the proposals should not create additional compliance obligations for companies that would otherwise be financially unaffected by the changes.
- The draft legislation can be found here and the consultation response here.