UK: Notable 2011 Developments
As the year winds down, a recap of some notable developments in the UK seems in order. Previously announced in the March budget and confirmed in the summer Finance Bill, the following changes are now in place:
CIT rate is to be progressively reduced from 26% in 2011-12 to 23% in April 2014.
Relief for capital expenditure on plant and machinery reduced from 20 to18% from 2012 to counteract the loss of tax revenue caused by the reduction in the Corporation Tax rate.
A UK company can now make an irrevocable election so that all its foreign branches, wherever they are located, are exempt from UK tax on their profits. There is then no relief in the UK if the branches make a loss.
In April, HMRC announced a change of approach to the way they have assessed penalties for delayed payment of VAT where the error reverses on a subsequent VAT return. Where HMRC are satisfied that, but for their intervention, the inaccuracy would have been automatically corrected in a subsequent return, the penalty will only be assessed on an amount assuming the correction on the subsequent return.
In other important UK-related news, in late November, the government announced proposals it described as the “most radical reform to the employment law system for decades” including reforms of the tribunal system, compensated “no fault” dismissals for companies with fewer than 10 employees, the introduction of tribunal fees and the reduction of the consultation period for collective redundancies. Please stay tuned.