The Office of Tax Simplification (OTS) published its report 'Simplification of the Corporation Tax Computation' in July 2017. It makes recommendations for Corporation Tax to be modernised and simplified.

The report looks at four broad themes:

It also highlights the links with HMRC’s work on Making Tax Digital (MTD), which offers a real impetus to move towards a simpler system by use of technology.

Angela Knight CBE, Chair of the OTS Board, said, "Despite the attention, Corporation Tax has received in recent years, in particular regarding multi-nationals, there has been little focus on making the tax simpler. In response to a clamour from companies of all sizes and types, the main recommendation is that the government should develop a clear and coherent roadmap for Corporation Tax simplification to give certainty for all companies".

Paul Morton, Tax Director, said, "A simpler approach would be to align the tax more closely with a company’s accounts, making it more intuitive, reducing compliance costs and saving time. This is particularly attractive for smaller incorporated businesses, which represent the overwhelming majority of companies".

The report makes recommendations to achieve this objective in a variety of innovative ways. It sets the scene for further work on the costs and benefits of moving to a depreciation-based approach to giving relief for capital expenditure which could offer a significant simplification for companies of all sizes.

Main recommendations

Small companies

Aligning tax with accounts

Across the whole range of companies, for

Capital expenditure

For the OTS to undertake further work on capital expenditure to explore the issues involved in replacing the present capital allowances system with an accounts depreciation approach and recognising the need to consider the impacts on particular industry sectors.

Large companies

For improvements to be made in a number of technical areas, in the context of promoting stability and certainty in the Corporation Tax system.

External link

OTS: Simplification of the Corporation Tax Computation


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