Tue 01 Apr 2014
Changes will be made to an anti-avoidance rule to enable the benefit of R&D Allowances to be transferred on the sale of a company that has incurred capital expenditure on R&D.
The “transfer of deductions” rules in Part 14A, CTA 2010 prevent the deduction of certain expenses on the change of ownership of a company, where there is a tax avoidance motive.
A company may incur pre-commencement capital expenditure that qualifies for R&D allowances. Once that trade commences, the company will be able to claim a 100% tax allowance for that expenditure as a ‘deductible amount’ against its taxable profits (provided that the R&D activity is connected with that trade). However, if there was a change of ownership of that company prior to the company commencing that trade, the company may be prevented from getting the tax relief.
Finance Bill 2014 will exclude from the anti-avoidance provision expenditure that crystallises as R&D allowances.
Subject to the going concern condition, R&D tax credit repayments are restricted where there are outstanding tax liabilities. HMRC has, however, clarified that VAT payments due between 20 March and 30 June 2020, that are deferred due to Covid-19, will not be considered outstanding liabilities for this purpose. Thus R&D tax relief repayments will not […]
The First tier Tribunal case of Ano (No1) Ltd is a successful example of a business applying commercial practical solutions to circumvent loss anti-avoidance. It relates to the restriction on the use of brought forward capital losses where a company’s ownership changes and there are profits available in the acquiring group. Instead of changing the […]
HMRC has issued a consultation on SME R&D tax relief that seeks to limit the abuse of the payable credit available to loss making companies. The method of restriction will be to limit claims for the payable credit to three times the company’s PAYE and NIC liability for the year. The measure will be introduced […]
R&D relief is a generous tax relief which encourages innovation. Currently R&D relief allows small and medium-sized enterprises (‘SMEs’) which are loss-making to claim a tax credit worth up to 14.5% of the surrenderable loss. However, HMRC have identified a number of structures being created to improperly claim the cash credit where there is no […]
HMRC has updated its manual at CIRD83200 to extend the deadline for submitting claims for R&D tax relief in respect of employees’ reimbursed expenses where the original claim omitted such claims based on previously issued incorrect HMRC guidance. The deadline has been extended from 31 January 2018 to 30 April 2018 (despite the continuing reference […]
HMRC has updated their guidance so as to remind corporate taxpayers of the time limit for submitting amended research and development (R&D) tax relief claims for reimbursed employee expenses, under the extended definition of staff costs contained in revised guidance issued in October 2016. Businesses may submit amended claims where they relied originally on an HMRC […]
The Government has today confirmed its intention to support innovation within the UK, having identified this area as a key driver for economic growth, with additional funding of £2 billion a year being made available and tax reliefs to be reviewed. The availability of additional funding and grants will be welcome news to innovative businesses […]
Every budget includes an element of parish notices for forthcoming changes, housekeeping and re-hashing of previously announced measures. George Osborne’s Emergency Budget is no different when it comes to corporate taxes. Outside of both the headline grabbing announcements and the significant changes hidden in the detail of the HMRC notices, there are a range of […]
A major change has been introduced to remove corporation tax relief on purchased goodwill and certain customer related intangible assets. Relief will still be available when the goodwill is sold. The measures will remove the current tax relief which is available for the accounting amortisation/impairment of purchased goodwill and customer related intangible assets (or the […]
From 1 April 2014 rules governing the disallowance of tax losses on change of control of a company are to be relaxed in two situations. Intra-group share-for-share reorganisation For corporation tax purposes when there is a change in ownership of a company with trading losses or other tax reliefs such as management expenses carried forward […]
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