Following the budget there were a few points I consider of interest to our clients:
- The change to 25% corporation tax in 2023 will mean that some companies will need to review their remuneration strategy and/or business structure, this is something we can assist with.
- Super deduction at 130% at the 19% corporation tax rate is equivalent to 25% deduction. The more cynical will consider this “incentive” to be merely a way of ensuring that companies do not defer investment for 2 years until the rate of corporation tax (and deduction) is at the 25% rate.
- Plant and machinery eligible for the super deduction will have to go into a separate pool. When the plant and machinery is sold it will have to be included at 1.3 times sale proceeds.
- There is an improved carry back of losses in that if the company does not need the cash flow it might be better to carry forward the loss for future relief at 25% rather than carrying back to get relief at 19%.
Bounce Back Loans and Furlough Claims
- With an increase to the resources for chasing down fraudulent bounce back loans and furlough claims, it would be pertinent to question whether HMRC will be investigating companies that made a profit after claiming them.
- It would also be pertinent to expect scrutiny should a company fold after receiving a bounce back loan, especially if the director withdrew cash.
- Recent discussions with an insolvency practitioner revealed some interesting practices during the pandemic in that HMRC are pushing through insolvencies with little interest in appointing their own IPs, this would perhaps to be a good time to liquidate.
- The other point to note is that there are no TUPE regs at the moment, therefore new companies do not have to take on employee obligations of the seller or an insolvent company.
Have you seen our year end checklist? Click here for all the important dates in one place for you to check that you are handling your finances as efficiently as possible.