The Chartered Institute of Taxation (CIOT) have published the text of a letter received from HMRC. This was in response to concerns as to how HMRC would settle open enquiries related to claims for the small companies rate of tax in respect of corporation tax periods ending before 1 April 2008.
HMRC have confirmed that the changes in Section 32 of FB 2008 will apply only to periods after 1 April 2008. These changes were introduced to remove the obligation to include in counts of associated companies those companies owned by otherwise unconnected fellow members of a partnership. Although the new rules are not backdated HMRC has indicated that enquiries into earlier periods will be opened only in cases where there is a significant amount of tax at risk.
HMRC have asked officers to review open enquiries for periods ending before 1 April 2008 to check that there was indeed a significant amount of tax at risk; if not the enquiry should be closed.