Spotlight 65 highlights GDPR claims

HMRC has published Spotlight 65 concerning the use of a General Data Protection Regulation (GDPR) provision to reduce tax liability. The department states:

‘HMRC is aware of tax agents that target businesses to claim corporation tax refunds through incorrect provisions linked to potential GDPR fines or civil claims.

‘These claims are designed to reduce business profits through the recognition of a provision and a corresponding expense. This leads to businesses paying less corporation tax than they should or claiming corporation tax repayments they are not entitled to. Provisions and related expenses should only be recognised in accordance with relevant generally accepted accounting practice (GAAP).

‘HMRC’s view is that these and similar claims are not in accordance with the law.’

HMRC explains that the arrangement involves an agent advising a business to set aside an amount as a provision for a potential breach of the GDPR...