Businesses should already be preparing for the following changes, which generally take effect from 1 January 2016:
Currently, business expenditure on capital investment in structures and associated buildings is not tax deductible. Proposals have been made by The Infrastructure Forum tax working group, which has a widely drawn membership, to grant writing down allowances on capital expenditure on structures and associated buildings. We believe it is essential to consider this with some urgency because of the Government commitment to implement international best practice on tax deductibility of interest, as set out by the OECD. Infrastructure is largely debt funded and any changes to tax relief are likely to have a serious impact on the affordability of infrastructure investment needed by the UK. Tax relief for structures and buildings will not help all projects but it will be of major significance to some.
It was very likely, in the wake of the OECD’s BEPS deliverables published in October, that we would receive more detail on how the UK plans to implement the OECD’s proposals. Some consultations have already been opened including proposals on how the UK’s Patent Box should be modified to comply with BEPS Action 5 and a consultation on the UK’s rules on the deductibility of corporate interest expense and how this is impacted by BEPS Action 4. A comprehensive plan was unlikely at this stage, however, as the Government has said it will be considering the recommendations set out in the BEPS reports as part of the development of a new business tax roadmap which is expected to be published in spring 2016.
Another key area where we thought we might see an update at the Autumn Statement is the large business compliance consultation that ran from July to October this year. The consultation, which is intended to drive improvements in large business compliance, featured proposals for large companies to be required to publish their tax strategies, to allow greater scrutiny of their tax affairs. Also proposed were a voluntary code of practice on taxation for large businesses, which would set out what HMRC expects from large taxpayers, along with giving HMRC new powers to tackle companies that persistently engage in ‘aggressive tax planning’ or refuse to engage with HMRC. These measures have provoked lively debate, and it remains to be seen how the Government will respond.
In addition, the Chancellor had already hinted that he would take action to stop “avoidance, evasion and imbalances in our tax system,” at the Autumn Statement, so there may have been additional measures to tackle tax avoidance by multinationals and corporates announced.