Sometimes commentators and advisers overestimate the effect of changes in the tax system by focusing on the changes themselves rather than the bulk of legislation remains the same. However, the changes to corporation tax (CT) which are foreshadowed by the Base Erosion and Profit Shifting project (BEPS) promise to revolutionise the way that we look at corporation tax, particularly in the UK.
BEPS will change substantially the way that CT is calculated and many of the old assumptions which have underpinned CT since 1965 have been overturned. These include:
- unrestricted carry-forward of losses
- unrestricted interest deductions
- the treatment of financial instruments on the basis of UK tax alone
- use of contracts being conclusive to determine where taxable income rises
- the use of double tax treaties to mitigate CT
- the definitions of permanent establishment
All of these elements have been or are in the process of being changed as the government responds to the bets proposals and seeks to safeguard its corporation tax base. In addition, the introduction of the diverse profits tax has led to more than 70 companies being under investigation for diverted profits.
There is a substantial divergence between the treatment afforded to small and medium-sized companies as opposed to large companies. Small companies may find that they have greater ability to obtain relief for losses and indeed interest payments and expenses. Large companies will find that they are subject to greater restrictions in these areas.
This is likely to change the way the corporation tax departments plan liabilities in the future
This course looks at how the rules will affect companies both large and small and the tax planning which needs to be considered in the new environment. Included are worked examples of how the changes affect companies.
The course is particularly aimed at in-house corporation tax teams planning their activities for the next four years.
