HMRC has published a revised version of draft Finance Bill legislation introducing changes to the treatment of companies’ carried-forward losses from April 2017. Comments on the revised draft are invited by 23 February 2017.
Draft Finance Bill legislation introducing changes to the tax treatment of certain types of carried-forward loss for corporation tax purposes was published on 5 December (cl 20 and Sch 6). The legislation makes two main changes. The first increases the company’s flexibility to set off carried-forward losses, either against the company’s own total profits in later periods, or in the form of group relief in a later period. The second limits the amount of profit against which carried-forward losses can be set to a maximum of 50% of the company’s total profits for the period, over and above a £5m annual allowance.
The new rules will apply to all losses arising on or after 1 April 2017. Losses arising before that date will remain subject to the existing rules and cannot benefit from the increased flexibility, but will be subject to the 50% restriction on the amount of profit that can be relieved by carried-forward losses.
The revised draft now contains specific rules for insurance companies and the creative industries, together with additional anti-avoidance rules to prevent exploitation and abuse of the new flexibility.
HMRC has published a revised version of draft Finance Bill legislation introducing changes to the treatment of companies’ carried-forward losses from April 2017. Comments on the revised draft are invited by 23 February 2017.
Draft Finance Bill legislation introducing changes to the tax treatment of certain types of carried-forward loss for corporation tax purposes was published on 5 December (cl 20 and Sch 6). The legislation makes two main changes. The first increases the company’s flexibility to set off carried-forward losses, either against the company’s own total profits in later periods, or in the form of group relief in a later period. The second limits the amount of profit against which carried-forward losses can be set to a maximum of 50% of the company’s total profits for the period, over and above a £5m annual allowance.
The new rules will apply to all losses arising on or after 1 April 2017. Losses arising before that date will remain subject to the existing rules and cannot benefit from the increased flexibility, but will be subject to the 50% restriction on the amount of profit that can be relieved by carried-forward losses.
The revised draft now contains specific rules for insurance companies and the creative industries, together with additional anti-avoidance rules to prevent exploitation and abuse of the new flexibility.
