Introduction to year-end tax planning

By Tolley
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The following Corporation Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Introduction to year-end tax planning
  • Introduction
  • Commercial considerations
  • Advancing expenditure and deferring income
  • Pensions
  • Capital allowances
  • Chargeable gains planning
  • Use of losses
  • International aspects
  • R&D and creative industry reliefs
  • Community investment tax relief (CITR)
  • Annual reviews

Introduction

This guidance note considers various aspects of year-end tax planning for large companies or groups. It is recommended that it is read in conjunction with the Chargeable gains planning, Group companies and International issues guidance notes so that as many relevant factors as possible are considered.

Other matters which could be relevant, depending upon the tax profile of the company, are:

  • whether deductions for expenditure on intangible fixed assets (IFAs) are being maximised ― see the Definition of intangibles guidance note
  • whether deductions for loan relationships are being maximised ― refer to the Loan relationships ― scope and definitions and Taxation of loan relationships guidance notes
  • real estate investment trusts (REITs) ― for the advantages and disadvantages of this regime to companies in the property sector, see the Real estate investment trusts (REITs) guidance note
  • review of time limits for claims and elections ― see Simon’s Taxes D1.1345 (subscription sensitive)

When undertaking any planning exercise, companies and their advisers should consider whether any relevant anti-avoidance provisions, Disclosure of Tax Avoidance Schemes and the General anti-avoidance rule are likely to apply.

Commercial considerations

Any tax planning exercise should include modelling all changes to income and expenditure to evaluate the impact on profit, cash flow forecasts and the balance sheet. A company’s taxation affairs and the taxation implications of any significant proposed transactions should be reviewed regularly based on reliable management accounts and forecasts. Material investment may negatively impact liquidity or borrowing requirements. This will be particularly relevant where the company is already committed to a programme of special or escalating dividends or regular share buy-backs. No company should contemplate large investment in assets that will adversely affect cash flow, significantly reduce working capital or prejudice

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