The Autumn Statement contained few changes to corporation tax as the Chancellor’s message centred on the long term economic plan in order to reduce the deficit.
Other than the few anti-avoidance measures that would mostly affect large multinational groups, very few measures were announced.
Corporation tax: amending loss relief provisions
The government will amend existing corporation tax provisions to ease the rules restricting the availability of relief for corporation tax trading losses when companies change ownership.
Corporation tax: associated companies rules
The government will replace the associated companies rules with simpler rules based on 51% group membership in April 2015, when the main rate and small profits rate of corporation tax are unified at 20%.
Close company loans to participators
Following a consultation launched at Budget 2013, the government does not intend to make any immediate changes to the structure or operation of the tax charge on loans from close companies to individuals who have a share or interest in them.
Avoidance scheme using total return swaps
The government will close down a tax avoidance scheme, with immediate effect, which has enabled companies to pay their profits to a company in the same group located overseas, thus escaping a corporation tax liability. It ensures that deductions are not allowed for corporation tax purposes where a payment is made under a derivative contract which is, in substance, a payment of profits.
Avoidance scheme - controlled foreign companies (CFCs): profit shifting
The government will make changes to the CFCs rules (with immediate effect from 5 December 2013) to address the transfer offshore of profits from existing UK intra-group lending. Legislation will be introduced in Finance Bill 2014 to establish a new rule which prevent a creditor relationship of a CFC from being a qualifying loan relationship if it arises as a result of any arrangement which has a main purpose of transferring out of the UK profits from a loan made by a UK company connected with a CFC.
Double taxation relief: closing loopholes
The government will, with immediate effect from 5 December 2013, close two loopholes to reinforce the UK’s double taxation relief policy that relief for foreign tax should only be given where income has been doubly taxed, once in the UK and once in the foreign territory.
Further information on corporation tax issues will be included in the next In Practice (on 20 December) which will provide more detailed analysis following the publication of the Autumn Statement legislation on 10 December.