Other news in brief

Other news in brief

A round up of other news this week.

The Finance Bill process has continued to move along, with the Public Bill Committee concluding on 27 April 2021. During the Public Bill Committee the remaining clauses of the Finance Bill, such as the temporary extension to carry back of trading losses and the extension of the temporary increase in the annual investment allowance, were considered. Following the conclusion of the Public Bill Committee, a revised version of Finance Bill 2021 was published incorporating the amendments agreed on during the Committee of the whole House and the Public Bill Committee, such as the changes to the drafting on the hybrid mismatch rules and stamp duty land tax in Freeports. The date for the next stage of the Bill, the Report stage, has not yet been announced. The Report stage is the final stage at which amendments to the Bill can be debated and passed.
At Budget 2021, the Chancellor announced a temporary extension to the carry back period from one to three years for trade losses of corporate and unincorporated businesses (for accounting periods ending between 1 April 2020 and 31 March 2022 for companies). HMRC have recently updated their guidance to provide further details on making claims for the extended loss carry back for companies. Extended loss carry back claims will be required to be made in a return, however, claims below a de minimis limit of £200,000, may be made outside a return. HMRC have clarified that amended company tax returns do not need to be submitted online; as the 12 month time limit for making amendments will have lapsed the amended return will be rejected. Where a de minimis claim is made outside of the company tax return, a letter should be sent to the company’s usual HMRC contact address for corporation tax including the relevant details. HMRC note that claims should not be made until the Finance Bill receives Royal Assent, which is expected to take place around mid-July 2021.
We are aware that HMRC Large Business have been writing to certain businesses on the subject of business entertainment. It appears their intention is to ensure the associated tax risks have been appropriately managed, such that only deductions for allowable expenditure are being taken in the corporation tax return. The letters do not appear to be a formal enquiry, but do request a response to three detailed questions which will require careful consideration prior to responding, to ensure that the business has appropriate processes and controls in place (and that these are being followed in practice). Particular care should be taken because if any adjustment is required, there are likely to be knock-on implications for other taxes as well as potentially affecting the HMRC business risk rating and Senior Accounting Officer submission. If your business has received such a letter please speak to your usual KPMG contact for advice.
The Public Accounts Committee has published a report on environmental tax measures, looking at how the tax system is used to achieve the Government’s environmental goals. In particular, the report concludes that HM Treasury has yet to set out how the tax system can help the Government achieve the UK’s net zero target and recommends that HM Treasury sets out a vision of how it will work to help achieve this. Further recommendations made by the Committee include that HM Treasury should set out a timetable for how it will consult on options for replacing declining revenues from the consumption of fossil fuels and that HM Treasury should assess the environmental impact of every tax change considered, publishing the expected environmental impact at the Budget.

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