As part of the phased rollout of the settlement opportunity HMRC has written to companies who have taken part in UK GAAP Corporates schemes.
UK GAAP Corporates schemes are broadly those which have sought to create a loss through the write-off of expenditure or the value of rights or assets through UK GAAP.
The terms of settlement are as follows:
- Loss relief against other income will be allowed in an amount equivalent to your contribution as a company contributed as the cash contribution, less any element expended on unallowable fees. (Unallowable fees are those spent on tax advice or circular funding arrangements. We will tell you if we believe a disallowance for fees is needed).
- The balance of the loss claim will not be allowable.
- Any share of income attributable to the cash element of expenditure will be taxable in full.
- Any share of income attributable to the loan financed element will only be taxable in so far as it represents investment income over and above the return of the initial capital.
Whilst not of general applicability to partnerships, within the specific terms of this settlement opportunity HMRC is prepared to settle with individual corporate partners, irrespective of whether or not the partnership itself continues to disagree with HMRC's view.
Further details are available from HMRC
