A leading tax expert’s claim last week that capital gains tax changestax changes are too complex for software suppliers. have proved far too complex for software suppliers has been dismissed as ‘unnecessary scaremongering’.
Speaking at the annual English ICA conference in London last week, John Battersby, personal financial services partner at KPMG, criticised proposed changes to personal CGT. He said complex government reforms to CGT left software vendors unable to produce CGT upgrades for this financial year.
Changes to CGT for individuals in the last Budget drew widespread criticism from the profession. Unlike the old system of indexation – which was frozen last April – tapered tax relief will not take into account asset gains made through inflation. Relief for business assets tapers at 7% per year, down to a limit of 25% after ten years. For non-business assets, like personal shares, the rate is 5%.
Battersby was critical of the new system, saying: ‘No software manufacturer can produce a taper relief program for this financial year. It is a considerable burden for clients holding and disposing of shares. Tapering is a complication, not a panacea.’
But Mark Lee, tax specialist and partner at BDO Stoy Hayward, defended software suppliers. ‘It’s an impossible dream that companies can produce new software only three months after an unexpected announcement,’ he said.
Lee accused Battersby of ‘unnecessary scaremongering’ and added that the CGT reforms only become relevant from 5 April 1999.
Corporate CGT also faces a shake-up. Just last month, the government completed its three-month business consultation into future reforms.
Mohammed Amin – who as a tax partner at PricewaterhouseCoopers is responsible for the company’s corporate tax software Powertax – said a corporate CGT overhaul would not pose any serious software problems.
‘The computational side of tapering is not that difficult if the legislation is numerically precise,’ said Amin. ‘Computer software can already fly missiles so it can certainly handle tapering.’
Tax software specialists will remain cautious about CGT. ‘We do not have any plans to produce specific individual CGT software but this is not because the legislation is too complicated,’ said Emily Cook, marketing manager for Taxsoft.
In a written statement specialist tax software house FDS Taxpoint said it had already implemented personal CGT changes into its portfolio-based system.
A spokeswoman for Transaction Software said the company planned to deliver updated individual CGT software by April of next year.
Senior technical officer at ACCA Chas Roy-Chowdhury said the biggest challenge to tax software would be to handle both indexation and tapering simultaneously during the transitional period. He advised clients to test new CGT software before buying.
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