OTS Small Company Taxation Review

[GB9]

First area of further investigation is recommended as 'look through'.

There's a surprise.

[jamesbrown]

Here. Yep, not really surprising, and it isn't a new idea. Indeed, apportionment is a very old idea and something that HMT were supposedly exploring again.

[WordIsBond]

The Americans have look-through as an option. You can have a chapter C or a chapter S corporation, the latter is look-through.

It is a reasonable approach as an option, definitely helpful in many cases, a bad thing if enforced / required.

[jamesbrown]

The Americans have look-through as an option. You can have a chapter C or a chapter S corporation, the latter is look-through.

It is a reasonable approach as an option, definitely helpful in many cases, a bad thing if enforced / required.

Reasonable, in principle, but it won't be optional, in practice, for at least two reasons: 1) it would be introduced, in part, to counter avoidance; and 2) it couldn't represent a simplification unless it was replacing something. Ultimately, if the aim is to replace IR35 or render it moot, this is just an alternative (preferred) implementation of strict deeming criteria (concerning which businesses are in scope, vs. which contracts of those businesses).

TBH, I'm rapidly losing interest in the entire, phoney, discussion. Tax objectives are continuously being packaged as something far more principled.

[flamel]

Tax objectives are continuously being packaged as something far more principled.

so agree with that one that I can't be bothered to read the whole document....yawn. I particularly like that apparently people have Ltd companies for loads of reasons other than tax efficiency - so therefore let's tax the f**k out of them and they won't mind

[mudskipper]

"1.43 Of all the topics we covered during this review, none were more divisive than look-through.
Respondents were generally either strongly against or strongly in favour; with accountants and
tax advisers generally against, small company owners generally in favour and representative
groups and bodies split between the two camps. One area where virtually all respondents were
in agreement was that if any look-through scheme was introduced, it should not be compulsory,
though that raises concerns with the OTS about adding complexity through choice (and of
course the implication that it could become a ‘lower tax’ choice)."

[WordIsBond]

though that raises concerns with the OTS about adding complexity through choice

Yes, we can't add complexity through choice. We're too busy adding complexity by compulsion.

[mudskipper]

Yes, we can't add complexity through choice. We're too busy adding complexity by compulsion.

I think we have to remember the objective - tax simplification. Introducing something new, without removing anything, might be simpler for those who use it, but is adding complexity to the system as a whole.

[jamesbrown]

Watching Parliament TV and caught this Ten minute rule motion from 2 March. Illustrates the continued pressure from the opposite end of the spectrum (i.e. low-paid workers being stiffed by their "employers"). Not a great cocktail.

[mudskipper]

Write up here

OTS tables sole trader-style reforms for one-person limited companies :: Contractor UK