HMRC to Introduce New Corporation Tax Refund Rate
HMRC is to introduce a new Corporation Tax rate of 45p for companies claiming tax refunds, to ensure that firms; “do not enjoy an unfair tax advantage at the expense of the public purse”.
Corporation Tax in the UK has been steadily declining to the joint lowest rate in the G20, making UK PLC an attractive prospect for businesses and investors alike when taken in tandem with our economy’s strong and steady growth.
The move to create the new tax class; confirmed on October 21st continues the governments “give with one hand, take with another” approach to business, first road tested with the reduction in Corporation Tax/Increase in Dividend Tax double header found in the post election Budget.
These changes; along with the changes to the way that private landlords are able to offset borrowing costs will find their full expression in the Chancellors Autumn Statement due on November 25th, 2015.
Chris Morgan of KPMG, described the announcement as “outrageous” and “spiteful” and warned that it risked damaging the government’s business-friendly credentials.
He said the affected businesses would challenge the move by requesting a judicial review, in which they could argue they were being deprived of an “effective remedy” to the breach of European Law by the government.
The new rate of tax was introduced in an amendment to the finance bill, imposed on restitution interest, which you can read here. The government is to justify this new tax rate by referencing the higher rates of corporate tax that applied at the time the companies overpaid and reflected “the particular circumstances of these awards”.