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Responses to HMRC consultation on taxation of non-resident companies

Responses to HMRC consultation on taxation

HMRC have published the responses received and next steps.


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HMRC have published the responses received to their consultation on bringing UK property income and gains of non-resident companies into corporation tax. As announced at the Autumn Budget, the Government will be making this change in April 2020. To ensure the provisions work as intended, the Government will conduct a technical consultation on the draft legislation in due course. They acknowledge there will be a need for transitional provisions. Draft legislation will be published in Summer 2018.

The response indicates that the rules will be largely implemented in line with the consultation proposals. In respect of losses the response document indicates that it is intended that existing income tax (IT) losses can be carried forward into the corporation tax (CT) regime (without any need to recalculate on a CT basis) and used without restriction provided the company continues the UK property business. After subtracting any carried forward IT loss, only the residual taxable income will be subject to the 50 percent loss restriction for CT losses. In terms of reducing the compliance burden, this seems like a sensible approach even though it requires tracking IT losses separately to CT losses. However it also means that carried forward IT losses will have considerably more value than CT losses after 2020, given they can be utilised without restriction.

For further information please contact:

Peter Beckett

Alexander Marcham

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