Earlier this year the TLRC responded to the consultation by the Inland Revenue and HM Treasury on corporation tax reform including aligning the corporate tax system more closely with accounts. We supported a number of tax reforms for companies and suggested that corporation tax could be rationalised and simplified; many unjustified economic distortions could be removed; and the scope for avoidance could be reduced.

As part of this process existing legislation should be reviewed to see whether it should be modified or perhaps omitted altogether in the light of closer alignment with accounts. The opportunity should also be taken to consider the scope to rationalise the tax code for companies where the issues arising are not directly related to the tax and accounting aspect. There are clearly limits to alignment with accounts but exceptions should be based on recognized principles and not merely made "ad hoc".

This Discussion Paper provides detailed consideration of selected existing corporate tax legislation concerning schedule A, the antiavoidance rules for companies and the rules for group relief set out in schedule 18 TA 1988.

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