Government proposals state that it should be able to claim tax before any cash is generated – such as where a property has increased in value but has not been sold.
‘Many profitable companies fail because of cashflow problems, so changes to the tax system which force companies to pay more tax, earlier, might force some companies out of business altogether,’ said Ruth Lea, head of the policy unit at the IoD.
The proposed changes come with the Revenues Consultation of Reform of Corporation Tax, which was published in August. While the changes may well achieve the Revenues goal of simplifying the tax system, it would do at an enormous cost to business.
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