The Chancellor of the Exchequer, Philip Hammond has responded to recommendations made by the Office of Tax Simplification (OTS) around corporation tax computation.
Making reference to seven of their recommendations, the Chancellor welcomed the suggestions from the OTS and although positive about many of the recommendations made, he urged the body to explore the various challenges in more detail. Officials from the Treasury continue to look at the feasibility of a further 25 recommendations.
On the subject of capital allowances, the Chancellor said:
“Your recommendation to explore the use of accounting depreciation instead of capital allowances is dependent upon resolving a number of significant issues arising from the change, including fiscal cost, avoidance opportunities and likely winners and losers. I therefore request that the OTS explores these challenges in greater depth, including comparison with any potential gains.”
It is unlikely that we will see a formal consultation on the subject prior to the Autumn Budget.