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The potential for the unintentional loss of tax losses in the COVID-19 environment

Published on 01 Jun 20 by "THE TAX SPECIALIST" JOURNAL ARTICLE

In the wake of the unprecedented environment arising from the COVID-19 crisis, it is likely that we will begin to see an increase in companies seeking to utilise the newly enacted similar business test (SiBT). The authors specifically consider the community-minded business response through production lines “hacks”. A number of business pivots publicised in the COVID-19 environment are examined to consider whether they stretch the SiBT beyond its scope, resulting in the potential loss of tax losses. In doing so, the authors reflect on how COVID-19 leads to established businesses facing similar limitations as start-up businesses, the likelihood of numerous pivots being required to get back on economic track and the anti-avoidance considerations that the appearance of such pivots create. It is concluded that COVID-19 creates a particular need to capture — in sufficient detail — these unusual activities to support any claim of tax losses.

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Elizabeth Morton
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Sarah Hinchliffe
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