But that could be achieved more directly, through targeted restrictions on annual loss utilisation or carry-forward, and without risking the profit-shifting incentives that a badly-designed, blanket mandatory exemption could produce.
Tax will never be totally simple. Because life isn't totally simple. But we don't have to make things worse.
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🚢 And this measure is unlikely to affect companies purely with "energy trading profits" - the profits that the Chancellor claimed in Parliament the measure would target. Downstream traders don't tend to have such large accumulated losses as upstream producers.
➡️ So: at first read, this is a modest tax-competition/territorialisation measure, likely popular with many large businesses, communicated cleverly as a way to hammer energy profiteers.
Stranding those losses in foreign branches may produce a temporary corporation tax bump from September, when applied to oil/gas companies.
TaxWatch
TaxWatch
🔎 For a deeper look at how HMRC believes one oil/gas trading company has shifted over a billion pounds of profits offshore - in ways that this proposed measure won't touch at all - see our latest report here: taxwatchuk.org/private-just...
This isn't party-political: last week we also saw the Chancellor announce "summer days out" VAT cuts that are an invitation to the kinds of definitional cases involving giant marshmallows that already clog up the Tax Tribunal, earning fees for specialist indirect tax lawyers.
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Whether it increases or decreases corporation tax revenues in the long run is probably highly uncertain, dependent on the balance of profits and losses - now and in the future - in currently unexempted branches. All of which is probably also very behaviourally influenced.
TaxWatch
🎉Tax-free overtime🎉
Sounds attractive: rewarding the strivers and the toilers.
But in real life, a potential recipe for manipulation, reams of resulting anti-avoidance legislation, and significant unfairness.
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