Corporation Tax Operational Consultative Committee

Minutes of meeting held on 1 May 2007 at 1 Parliament Street

Present:

HMRC

Alex Hardaker – CT & VAT (Chair)
Michael Christy - CT & VAT (Secretary)
Veronica Mcleod – CT & VAT
Steve Coad – CT & VAT
Geoff Lloyd - CT & VAT (Director)
Simon Woodside – CT & VAT (Deputy Director)
Carol Lunney – CT & VAT

Representative bodies

Sebastian Hordern (CBI )
Richard Baron (IOD)
Graham Wheeler (IOD)
Colin Davis (CIOT)
Ian Young (ICAEW)
Carolyn Fisher (ICI)
Lakshmi Narain (CIOT)
Tom Duffy (ACCA)

Introduction and apologies

  1. Welcome by Alex Hardaker. Donald Drysdale (ICAS) took part via telephone conference. Apologies were received from Mukesh Gunamal (ACCA), Chas Roy-Chowdhury (ACCA), Derek Allen (ICAS), Jackie Latham (ICAEW) and Ruth Paynter (CT & VAT).

CT Administration Burden

  1. HMRC gave a brief update on work towards reducing administrative burdens on business of complying with tax obligations and said that the reduction is being measured against the baseline produced by the KPMG study. HMRC aim to reduce the baseline by ten per cent by 2010/11. HMRC are currently exploring options to reduce the administrative burdens identified by the KPMG report and were inviting further suggestions from representatives.
  2. There was a brief discussion regarding the possibility of basing the corporation tax charge on accounting profits for very small companies or companies with no profits. Representative bodies were broadly receptive to the prospect of discussions to explore ideas for reducing administrative burdens for incorporated business and processing costs for HMRC. However, representative bodies made the point that there was a wide range of reasons why companies needed to file CT returns even if there were no chargeable profits – for example, establishing entitlement to losses for carry forward or back.

Substantial Shareholdings Exemption (SSE)

  1. HMRC confirmed that they are in the process of introducing a pilot extension of the COP 10 procedure for both SSE and SDLT. This will be done as part of the second proposal in the Review of Links with Large Businesses.
  2. Most of the CTOCC representatives had already attended the SSE meeting held in April and were already aware of what had been discussed.
  3. HMRC said that it will aim to publish an update on the website in the near future.

Enquiry windows and large groups

  1. HMRC thanked those representatives who had provided comments on the briefing note that had been issued after the last meeting. There was general consensus that, while the change in Clause 95 of the Finance Bill is welcome, it would be even more helpful if HMRC were able to offer some form of further encouragement to members of large groups to file early where they were able to do so.
  2. There was a brief discussion of the options. HMRC said it would be difficult to legislate, but that it was keen to explore what could be done by way of a statement of operational practice. It was agreed that HMRC would provide a further update on this issue at the next meeting and will circulate a paper in advance. A separate meeting will be arranged to discuss this issue after the next CTOCC, if representatives thought this would be helpful.

Non close companies in liquidation

  1. Representatives raised some concern regarding a case involving a non close company in liquidation. HMRC confirmed the current legislation and the Policy view on this issue and requested the representative to provide further information on this particular case so that it can investigate further.

Offsetting overpayments and underpayments in VAT and direct tax

  1. Representatives said that it would be very helpful if HMRC consider the possibility of offsetting overpayments and underpayments in VAT and direct tax cases. HMRC confirmed that currently they were already considering this issue.

Delays in opening enquiries on Tax Returns

  1. Representatives raised concerns regarding delayed HMRC responses to the submission of returns – particularly in relation to large corporates. It was thought to be unhelpful that the opening of enquiries was often delayed until near the end of the of the 12 month enquiry window.
  2. HMRC provided statistics indicating that less than 14 per cent of enquiries were opened in the last month before the end of the enquiry window. However, no breakdown was available between those cases dealt with in LBS and in the local office network. HMRC suggested that the issue was probably best suited for discussion direct with the Large Corporates Forum and would pass on the concerns to colleagues in the LBS .

CTSA in Practice

  1. HMRC confirmed that the necessary Budget changes to the online CT600 will be made by October 2007.
  2. HMRC noted that online filing take up is now up to seven per cent (92,500).
  3. HMRC is in the process of reviewing and re-designing the new company information form CT41G. In particular, they wish to make it easier for dormant companies to tell HMRC that they are not yet active.
  4. There was a discussion of the timing of HMRC contact with newly formed companies. Representatives thought that it was useful to receive the CT41G immediately, and were not aware of any other particular issues, but agreed that the redesign would be helpful.
  5. Representatives said they were interested in HMRC exploring the possibility of offering a payment on account facility for small companies, with some encouragement (eg interest) to pay early.

AOB

  1. There was a brief discussion regarding the choice of XBRL as the technology format for CT online filing. Representatives reported that they are already in discussion with HMRC Carter team regarding this issue.

Next meeting

  1. It was provisionally agreed to hold the next meeting in September.