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A big change

Renowned tax writer and editor of numerous tax journals, Pete Miller of The Miller Partnership, talks to Jane Walker about some changes that he believes will impact on everyone...

Pete recently made his debut at the ICAEW Practical Tax Conference with a session on “Corporate Losses and the new Substantial Shareholding Exemption”.

His in-depth talk explored the key changes and what they actually mean for practitioners and their clients – and raised some issues that he believes that not everyone is fully aware of. In a special interview after his session, we asked Pete about the changes and why those involved in tax should take note.

All change…

“The first thing is the key change to the Substantial Shareholding Exemption – there is no longer a requirement for the seller to be a trading company, so you can actually have a straight-forward, simple holding company with a trading subsidiary, like lots of our clients, and if you sell the trading company there is no tax. It sounds likes a really simple change, but it opens the door to many more exempt transactions” Pete explained.

Pete was also keen to stress the significance of 1 April 2017, particularly in relation to changes in the corporate loss regime; “You’ll actually have to calculate any losses that a company might have up until that date, because the old, more restrictive, rules apply until then. Any losses arising from 1 April 2017 onwards will be under the new rules and will be much more flexible, so you may need to actually be able to produce records to HMRC to demonstrate how you have apportioned losses between the ‘old’ and ‘new’ regimes”.

Don’t assume this won’t affect you…

Although a comparatively small part of his session, Pete felt that the biggest issue was a change to how companies use losses; “For companies with a relatively high level of profit – £5 million and above – and also with losses, the is a restriction on the rate at which they can use up their losses. Obviously that’s not going to affect most of us, but there are some compliance requirements that will impact on everyone; in essence, even the tiniest company – if it’s going to be using some losses – will need to comply with certain requirements and demonstrate that they’re not affected by the restriction.

“The problem here is that nobody – or at least very few people – realise this; we all pretty much ignored it, thinking it only applied to those with more than £5 million profits. As soon as I found out about the change I’ve been telling people ‘don’t ignore this new restriction just because you don’t think it applies to you, because if you do you might just find out that it applies to you anyway!’”.