OTS recommend simplifying corporation tax compliance

The long awaited OTS review of corporation tax has been published.

Wide ranging reforms recommended, including:

Small companies

  • For the very smallest companies, to use the accounting profit prepared under accounting standard FRS105 as the taxable profit without any adjustments.
  • For slightly larger companies, the proposal is that companies should only need to consider a set list of five or six potential tax adjustments.

Aligning tax with accounts

Across the whole range of companies, for

  • the tax definition of capital and revenue to be more closely aligned to the accounts definitions,
  • the rules for trading and management expenses to be aligned
  • the 19th century schedular system (under which different types of income are calculated separately subject to slightly different rules) to be replaced with a “whole business” approach, in line with most other countries

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, 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.


Bob Edwards

Bob has been working with practices across the UK offering novel ways to improve cross-sales and increase new client acquisitions. He is also interested in "step changes" in legislation that offer challenges, and therefore opportunities, for practitioners to provide new recurring and one-off support services to clients.

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