Full expensing allows for a 100% first-year capital allowance for qualifying plant and machinery assets and came into effect last April. To qualify for full expensing, expenditure must be incurred on the provision of “main rate” plant or machinery.

Full expensing is only available to companies subject to Corporation Tax. 

Plant and machinery that may qualify for full expensing includes (but is not limited to):

• machines such as computers, printers, lathes and planers;
• office equipment such as desks and chairs;
• vehicles such as vans, lorries and tractors (but not cars);
• warehousing equipment such as forklift trucks, pallet trucks, shelving and stackers;
• tools such as ladders and drills;
• construction equipment such as excavators, compactors, and bulldozers; and
• some fixtures such as kitchen and bathroom fittings and fire alarm systems in non-residential property.

Under full expensing, for every pound a company invests, their taxes are cut by up to 25p. For “special rate” expenditure, which does not qualify for full expensing, a 50% first-year allowance (FYA) can be claimed instead.

Businesses can also continue to use the Annual Investment Allowance (AIA) to claim a 100% tax deduction on qualifying expenditure on plant and machinery of up to £1m per year. This includes unincorporated businesses and most partnerships.

Tax relief may be available for post-cessation expenses of a trade. To be an allowable post-cessation expense the trade must have ceased and the expense must have been deductible in calculating the trading profits.

This means that the expense still has to meet the wholly and exclusively test and be revenue, not capital, expenditure. The expenditure can be apportioned if necessary. The way in which post-cessation expenses can be relieved depends on the person incurring the expenditure and the type of expenditure involved.

The following are examples of expenses that would likely be categorised as post-cessation expenses:

• remedying defective work done, goods supplied, or services rendered while the business was continuing or as damages in respect of such defective work, goods or services whether awarded by a Court or agreed during negotiations on a claim;
• paying legal or other professional expenses incurred in connection with the costs above;
• insuring against liabilities arising out of any such claim or against the incurring of such expenses; and
• collecting, or seeking to collect, debts which were taken into account in computing the profits of the trade before discontinuance.

An expense specifically relating to the cessation itself is not an allowable deduction for tax purposes.

HMRC has the power to make directors personally liable for paying the tax debts of companies they have been involved in under certain limited circumstances. This can also apply to certain other individuals associated with a company.

A joint and several liability notice tells the recipient that they are personally responsible, along with the company and anyone else issued with a notice, to pay the penalty amount raised against the company.

There are a number of important conditions that must be met before HMRC can issue a notice. The underlying legislation applies to liabilities relating to any period that ended on or after 22 July 2020. 

Directors could receive a joint and several liability notice in cases of:

• tax avoidance and tax evasion;
• repeated insolvency and non-payment cases; and
• facilitating avoidance or evasion, for example, helping others to avoid or evade paying tax due.

HMRC must be informed when a non-trading or dormant company starts trading and becomes active for Corporation Tax purposes. Companies can use HMRC Online Services to supply the relevant information. 

When a company has previously traded and then stops it would normally be considered as dormant. A company can stay dormant indefinitely, however, there are costs associated with doing this and certain filings must still be made to Companies House. The costs of restarting a dormant company are typically less than starting from scratch again. 

The following steps are required:

1. Tell HMRC that your business has restarted trading by registering for Corporation Tax again.
2. Send accounts to Companies House within 9 months of your company’s year end.
3. Pay any Corporation Tax due within 9 months and 1 day of your company’s year end.
4. Send a Company Tax Return – including full statutory accounts – to HMRC within 12 months of your company’s year end.

Whilst reporting dates for annual returns and accounts should remain the same. The Corporation Tax accounting period is different and is set by reference to the date when the company restarts business activities.