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Hmrc Tax Offsetting Rule To Drive More Biz's Under

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May be of interest ..

HMRC is claiming that it needs to change how loss relief works because a minority of taxpayers look to create artificial or enhanced losses to reduce or eliminate their tax liabilities on their general income. HMRC is concerned that the amount of loss relief claimed often greatly exceeds the actual economic loss, if any, to the taxpayer concerned.

According to UHY Hacker Young, giving HMRC the power to sit on legitimate tax refunds at a time when many taxpayers are financially stretched could be disastrous for many small businesses which may have to wait months – or even years – to get money to which they are entitled.

Roy Maugham, Tax Partner at UHY Hacker Young, comments: “Struggling businesses can hardly afford to pay tax and wait for the refund. These proposals will cause serious cashflow problems for a huge number of legitimate businesses and some will probably go to the wall as a result.”

“The vast majority of businesses who offset trading losses against income tax are abiding by the current rules. HMRC’s proposals may reduce tax avoidance, but only by inflicting a form of collective punishment on thousands of legitimate businesses.”

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Dont all big businesses make strategic losses?

Yes, but they can afford good lawyers and accountants and hence are not as easy a target. Burglars and highwaymen always choose helpless or unprotected victims.

Edited by Tiger Woods?
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