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Green light for reform
KEY POINTS
- The OTS concluded the capital allowances regime should be reformed rather than replaced by accounts depreciation.
- Simply widening the scope of annual investment allowance would not be enough.
- Categorisation of expenditure would be problematic for a system of accounts based capital allowances.
- Simplifying capital allowances in general has most merit.
- Other aspects of the capital allowances regime that cause problems.
Think back to July 2017 when the Office of Tax Simplification (OTS) published its report on the simplification of the corporation tax computation. It made several recommendations but concluded ‘further work needs to be done to explore more fully the impact of replacing capital allowances with accounts depreciation’ (tinyurl.com/wzcz8au).
This ‘further work’ manifested itself in...
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