Companies could be taxed on the listed value of their properties rather than on proceeds raised from sales, in the biggest shake-up of corporation tax since it was introduced nearly 40 years ago.
A government consultation paper published today sets out Treasury plans to change the taxation of capital gains to an income-based regime.
Gains would be taxed on the amounts stated in company accounts, rather than on the proceeds raised from actual disposals.
The Treasury said that it was seeking views on how corporation tax could be modernised and made simpler in a bid to transform Britain’s complicated and anachronistic tax system so that it more closely reflects the way companies account for their business activities.
The consultation paper states: “There is an economic case for treating gains and losses on capital gains assets in the same way as income profits.”
As part of the proposals, profits and losses would be taxed on the basis of amounts listed in companies’ accounts – on a mark-to-market or realisations basis.
Other proposals include phasing out the capital allowances regime, and replacing it with relief for the cost of assets as they depreciated in companies’ accounts.
EGi News 06/08/02
