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HMRC are currently consulting on an “Above the Line” (ATL) for large companies. It is to be introduced in April 2013 following further consultation and will be published in the Finance Bill 2013, making it effective from April 2013. So what does ATL mean?
In essence it is a move from the current superdeduction to a credit offset against corporation tax (which is commonly referred to Above The Line “ATL”). It will show the credit in the P&L account under R&D costs rather than a credit to the P&L tax charge. The actual level of benefit will remain broadly the same and therefore the recent consultation focused on whether the change in reporting format would encourage further R&D activities. The following favourable points were put forward:-
We believe that ALC does present a number of other practical challenges in the following areas:-
However these considerations are certainly not show stoppers and we are in favour of the ALC method of reporting for large companies.
We will continue to consult with HMRC on this subject as we believe that ALC will make the R&D Tax Relief more visible to budget holders and hence decision makers. We fully support the goal of making Britain the European hub of innovation.
If you would like to discuss any aspect of this post further, please do not hesitate to contact us.
Barrie Dowsett ACMA, GCMA