Corporate taxes

摘要

Compliance with and enforcement of tax law is high in the UK, especially among public limited companies. HM Revenue Customs (HMRC), the tax collector, has intensified enforcement procedures in recent years. The Finance Act 2006 extended anti-avoidance rules that require companies to give HMRC early notification of certain financial and employment tax-avoidance schemes whose main benefit is obtaining a tax advantage relative to capital-gains tax, corporation tax, income tax or stamp-duty land tax. The regime for penalties has also been modernised and tightened. During the UK's membership in the EU (and during the post-exit transition period), the British authorities had to monitor developments in EU jurisprudence to ensure that national corporate tax provisions aligned with EU law. There was significant litigation in both the British courts and the European Court of Justice (ECJ), where it was argued that certain British tax provisions were contrary to EU regulations. These included the following: taxation of foreign dividends, British legislation on controlled-foreign-companies (CFCs) and restrictions on tax relief for interest paid by a thinly capitalised company. British legislation was amended in 2006 to allow relief in the UK for losses of European group companies in some situations, following a decision by the ECJ in a case involving UK retailer Marks Spencer in 2005. Changes to the CFC regime included in the Finance Act 2012 were aimed partly at addressing successful challenges by the ECJ. Questions about the CFC regime were again raised in 2019, when the European Commission said that some aspects of the rules constitute illegal state aid. The UK passed legislation in 2020 to address these concerns.