T: 01784 777 700 | E: enquiries@taxsystems.com | W: www.taxsystems.com

Alphatax UK

Release Notes Enterprise: Version 19.1

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Contents

1. Introduction ............................................................................................................ 4

About version 19.1 ................................................................................................ 4

Technical support .................................................................................................. 4

2. Important notices .................................................................................................... 5

Changes to the Alphatax Enterprise SQL server connection ......................................... 5

Changes to the function of existing inputs................................................................. 5

Microsoft end support for SQL Server and Windows Server 2008/2008 R2 .................... 6

Microsoft end support for SQL Server OleDb driver (Enterprise only) ............................ 6

Upgrading Alphatax Database in Version 19.1 ........................................................... 6

3. Installation ............................................................................................................. 7

Installation key ..................................................................................................... 7

Downloading and installing Alphatax ........................................................................ 7

Templates ............................................................................................................ 7

Alphatax platform support ...................................................................................... 8

4. Legislative changes.................................................................................................. 9

Non-resident companies with UK property income ..................................................... 9

Structures and buildings allowances ....................................................................... 12

5. Returns and e-filing ............................................................................................... 13

CT taxonomy changes .......................................................................................... 13

Detailed profit and loss account ............................................................................. 13

Miscellaneous e-filing changes ............................................................................... 14

6. Specialist companies .............................................................................................. 15

Creative industries ............................................................................................... 15

Banking companies .............................................................................................. 15

Real estate investment trusts ................................................................................ 16

Partnerships ........................................................................................................ 16

Life assurance companies ..................................................................................... 17

7. Miscellaneous changes ........................................................................................... 18

Carried forward loss restriction .............................................................................. 18

Corporate interest restriction ................................................................................ 18

Capital allowances ............................................................................................... 18

Capital disposals .................................................................................................. 19

Very large instalment payments ............................................................................ 19

Other miscellaneous changes ................................................................................ 19

8. System changes .................................................................................................... 20

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9. Optional modules .................................................................................................. 21

Accounts Analysis ................................................................................................ 21

Tax Accounting .................................................................................................... 21

Group ................................................................................................................ 22

Tax Pack ............................................................................................................ 22

Compliance Cycle Manager ................................................................................... 23

10. Appendix 1: IT help and guidance ........................................................................... 24

11. Appendix 2: Security penetration testing policy ......................................................... 25

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1. Introduction

About version 19.1

Welcome to the version 19.1 edition of Alphatax UK.

This release includes the following features:

Finance Act 2019 changes applying to Non-resident companies with UK property income

Changes to the Alphatax Enterprise SQL server connection (see important notices)

Support for the Corporation tax 2019 XBRL taxonomy

Enhancements for special company types including Creative Industries, Banking

companies, REITs, Partnerships and Life assurance companies

Selected product enhancements and minor changes to resolve reported customer issues

We encourage you to read the important notices section on page 5 which outlines key changes

in this release which may require your action.

We also provide a summary of technical changes which may be useful for your IT team on

page 24.

Technical support

We provide a technical support help desk for users requiring assistance. The help desk can be

contacted by telephone between the hours of 9.00 am and 5.30 pm, Monday to Friday

excluding public holidays.

If you require help or further information, please contact the support team on:

UK: Tel: +44(0) 1784 777 666 Email: support@taxsystems.com

Ireland: Tel: +353 (0) 1661 9976 Email: support@taxsystems.ie

Please note: We recommend that you use the E-mail Support option from the Help menu in

Alphatax to send copies of the computation directly to Support.

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2. Important notices

Changes to the Alphatax Enterprise SQL server connection

In previous versions of Alphatax Enterprise users could elect to connect to the SQL Server

containing the Alphatax database using either Windows authentication, or server

authentication via the default Alphatax account. Alphatax now also supports the ability to

change the password assigned to the default Alphatax user account when using server

authentication.

The changes required to support this change mean that action will be required as part of the

upgrade process to Alphatax UK 19.1 to ensure that users can continue to access Alphatax.

Further information is provided on the following link.

Changes to the function of existing inputs

In this version we have made changes to the function of two inputs that were introduced in the

previous edition. Computations where either of these fields have been used should be reviewed

upon upgrading.

Non-resident disposals of interests in UK land

In the previous edition of Alphatax we

added a Disposal of an interest in UK

land by a non-resident? field to the

Capital disposals input statement to

allow the rules introduced by Finance Act

2019 for such disposals to be reflected.

In the 2019 version of their XBRL CT

taxonomy HMRC have elected to add

two new dimensions to account for these

disposals. Consequently, we have

withdrawn the input we had previously

created and introduced two new inputs

to match the dimensions that HMRC

have now provided.

A diagnostic will be displayed in computations where the original input had been used, which

advises users to remove the entry and instead select the appropriate ‘direct’ or ‘indirect’

disposal dimension from the Asset type (XBRL Classification) field.

Please see page 13 for further details of these changes.

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Investment assets capital allowances

In the previous edition of Alphatax we added a Disallow deduction of investment assets

capital allowances from BLAGAB trade profits? field to the Life assurance options input

statement. This reflected HMRC guidance in the draft version of the new Life Assurance manual

which contradicted the previous commonly accepted approach.

The final version of the HMRC Life Assurance manual has now been published, and LAM15000

confirms that capital allowances on investment assets are generally not allowable for the

purposes of calculating BLAGAB trade profits and are allowable in calculating I-E profits only.

We have sought confirmation from HMRC who have advised that they consider that the revised

manual provides the correct expected treatment. HMRC confirmed that they will not seek to

challenge capital allowances claims that were submitted for accounting periods ending before

31 December 2018.

In this Alphalife edition we will apply the revised treatment by default and have accordingly

swapped the effect of the above flag. Alphalife will now not include a deduction for investment

assets capital allowances by default in periods ending on or after 31 December 2018. The flag

is retained, but it will now be used to allow a deduction for any users who wish to apply the

previously accepted approach.

Users who have previously used this flag in periods ending on or after 31 December 2018

should review computation in the latest Alphalife version. Please see page 17 for further details

of these changes.

Microsoft end support for SQL Server and Windows Server

2008/2008 R2

Alphatax will no longer support these platforms in line with Microsoft ending support. Further

details are provided in the Installation section on page 7. Technical details are provided in

Appendix: IT help and guidance on page 24.

Microsoft end support for SQL Server OleDb driver (Enterprise

only)

Microsoft have indicated that they will no longer update the SQL Server OleDb driver (sqloledb)

with new features; this was previously the sole provider used by Alphatax.

With this release we have also added support for the latest Microsoft OLE DB Driver for SQL

Server (msoledbsql). If you use Microsoft SQL Server, then we strongly advise that you

download this replacement driver which is currently being maintained and supported by

Microsoft. Using the new driver will also allow you to take advantage of the improved security

features of TLS 1.2. This driver must be installed on every workstation for Alphatax to access

the database. Further details are provided in the Appendix on page 24.

Upgrading Alphatax Database in Version 19.1

In version 19.1, upgrading a database will require system administrator privileges. This is due

to changes in the database structure.

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3. Installation

Installation key

Your 16-digit Alphatax installation key is provided in the email that you received announcing

the release. The Alphatax installation key is required to both download and install Alphatax.

Should you have any queries, please contact the support team on 01784 777666 or at

support@taxsystems.com.

Downloading and installing Alphatax

Please download the copy of Alphatax from the releases download site

https://releases.taxcomputersystems.com, which will require you to enter your email

address and your 16-digit Alphatax installation key. This process will generate an automated

email with a unique URL which will be sent to your email address.

The URL will allow you to download the Alphatax installer along with other applications which

you are registered to use and also installation guides and release notes.

Click on ‘Alphatax v19.1.exe’ to initiate the installation process for which the Alphatax

installation key will again be required. Press the Enter key at the prompts. The installation

process will override the old version of Alphatax. For detailed information on the installation

process refer to the Alphatax UK Installation Guide. This can be retrieved from the user

documentation section of the download screen.

Enterprise users, using the Oracle or MSSQL databases, should also run the database update

script from within the Enterprise Manager utility. The database version is now 40. The

Enterprise Manager is automatically extracted from within the Alphatax Installer package.

Templates

The installation will reinstall the standard Alphatax templates to ensure that you have the

latest version.

To allow you to retrieve your own versions of these templates, if applicable, the old templates

are stored in a new folder called BACKUPXn (where n is a number incremented for each new

installation).

Please note: This part of the process may take some time. A progress bar displays the names

of templates as they are being copied.

Folders called BACKUPXn created in the version 19.0 release are removed with this release.

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Alphatax platform support

Operating Systems

Alphatax is supported on Windows 7 and later operating systems for the desktop solution.

Alphatax is also supported on Windows Server 2012 and later on servers.

Windows Server

Microsoft ended support for Windows Server 2008/2008 R2 in 14 January 2020. In line with

this we are withdrawing support for Alphatax running on Windows Server 2008/2008 R2 from

this Alphatax edition.

SQL Server (Enterprise only)

Microsoft ended support for SQL Server 2008/2008 R2 on 9 July 2019. In line with this we are

withdrawing support for SQL Server 2008/2008 R2 from this Alphatax edition. From Alphatax

UK 19.1, Enterprise Manager will not allow you to create an Alphatax database or update an

existing Alphatax database when using SQL Server 2008/2008 R2 and will instead warn that

you need to update to a supported version of SQL Server.

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4. Legislative changes

Non-resident companies with UK property income

Schedule 5 of Finance Act 2019 introduced legislative changes that bring non-resident

companies with a UK property business or other UK property income into the charge to

corporation tax. This was principally achieved by amending the existing territorial scope of

corporation tax rule in CTA 2009 s5 and applies for accounting periods beginning on or after 6

April 2020.

Such companies were previously referred to as non-resident landlords and were taxed under

income tax rules, being required to complete a form SA700. They will now be brought into the

corporation tax regime and so will be required to register for CTSA and complete form CT600

and will be subject to mandatory online filing and XBRL tagging of the computation and

accounts.

Transitional arrangements apply which are designed to ensure a smooth transition between the

two regimes. Periods straddling the commencement date of 6 April 2020 are treated as two

notionally separate accounting periods with the first period ending on 5 April 2020 and being

subject to income tax rules, and the second commencing on 6 April 2020 and falling under

corporation tax rules.

Existing non-resident landlord computations in Alphatax will be identified by a Yes entered in

the Is the company a non-resident company liable to Income Tax (SA700)? field on

the Standing data input statement. In previous editions this entry caused Alphatax to display a

tailored set of input statements that were designed to allow form SA700 to be populated.

For this edition of Alphatax, we have introduced changes that will automatically transition

these computations into the corporation tax rules from 6 April 2020. The following passages

describe the transitional arrangements that are relevant.

Note that Alphatax previously displayed a diagnostic for non-resident landlord computations

where the period dates were set to anything other than 6th April to 5th April. The final non-

resident period should accordingly be created as 6th April 2019 to 5th April 2020, and in the

subsequent period that begins on 6th April 2020 the transitional arrangements will be applied

automatically. Alphatax therefore does not apply straddling period treatment, and a long

period of account computation should not be used for the 2019-20 period.

Property business losses carried forward

Upon commencement of the new regime, any UK property business losses that have arisen

under income tax rules and are unrelieved may be carried into the corporation tax regime

under FA 2019 Sch 5 para 37. These losses are available to be carried forward and offset

against future profits of the UK property business, and related loan relationships or derivative

contracts, for so long as the company carries on the same business. The losses must be offset

against the earlier periods in priority to later ones, and relief is automatic so may not be

disclaimed.

The offset applies under a new section in the legislation – FA 2019 Sch 5 para 37, as opposed

to CTA 2010 s62 which generally provides relief for losses made in a UK property business –

and this new paragraph has not been included in the carried forward loss restriction rules of

CTA 2010 Part 7ZA, so the offset is unrestricted.

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In this version, we have introduced a new Non-resident company in receipt of UK

property income? flag to the trade Accounts adjustment input statement. When set to Yes,

the input and report statements for the property business will be amended to refer to losses as

pre-6 April 2020 and post-6 April 2020. Any losses carried forward at the end of the 2019-20

income tax period will be automatically included as a brought forward balance in the pre-6

April 2020 stream in the period beginning on 6th April 2020 to be offset against future profits of

the same business.

Note that any losses arising in the property business whilst it falls within corporation tax rules

will form part of the post-6 April 2020 stream and will be treated under the normal UK

property business rules.

Quarterly instalment payments

The quarterly instalment payment provisions of SI 1998/3175 – which would otherwise make

tax payable significantly earlier than previously for large non-resident companies – are

disapplied for the first accounting period following transition under FA 2019 Sch 5 para 48.

Alphatax will automatically disable both large and very large quarterly instalment payments

calculations for the period beginning on 6 April 2020.

Capital allowances

Previously, a UK property business ceasing to be within the charge to income tax would trigger

a disposal event for capital allowances purposes as a result of ITTOIA 2005 s362. This section

however has been repealed by FA 2019 Sch 5 para 8 and so capital allowance balances will

transfer into the corporation tax regime with no balancing charges or allowances arising.

User entries that may be required

The following fields should be considered in the period that begins on 6th April 2020:

The company is required to register for CTSA and so should receive a new Corporation

Tax Unique Taxpayer Reference (UTR). Alphatax will bring forward the Income Tax

version from the previous period, and so the Tax reference field on the Standing data

input statement should be updated.

For the ‘trade’ item that will be carried forward from the non-resident landlord periods of

the computation, set the Is this a property business? flag to Yes on the Accounts

adjustment input statement to ensure that the correct tax treatment is applied for profits

and losses of the activity.

Note that any balance that may be carried forward on the Trade taxed income statement

should be adjusted out using the Transfer column at the end of the 2019-20 period.

Diagnostic ID 492 “Trade related inputs have been used for a property business” will be

displayed where a brought forward balance is present on this statement in the period

beginning on 6th April 2020.

Where the non-resident company previously carried on a UK furnished holiday lettings

business, a new trade should be created in the period beginning on 6th April 2020 with

the Is this a furnished holiday letting? flag set to Yes on the Accounts adjustments

input statement.

Any capital allowance balances may need to be transferred into the new trade using the

relevant adjustment inputs, and any losses brought forward should be brought in using

the Adjustment input on the Losses input statement.

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The tax accounting schedules in Alphatax are print suppressed for non-resident landlord

computations. Upon the transition to corporation tax rules these statements will become

enabled by default, however any prior period or brought forward amounts presented may

be unreliable. Use the First year that Alphatax is used for tax accounting? flag on

the Tax accounting options input statement to allow the appropriate prior period amounts

to be entered, or alternatively use the Suppress tax accounting flag to hide these

statements where they are not being used.

HMRC guidance

Regarding the practical implications of the transition to corporation tax for non-resident

companies, HMRC have recently published the following guidance:

https://www.gov.uk/guidance/paying-corporation-tax-if-youre-a-non-resident-company-

landlord

Among other details, this guidance includes the following important information:

Non-resident companies will be automatically registered for corporation tax and will be

sent a company UTR. Companies should contact HMRC if this has not been received by

30 June 2020.

Companies will need to register for HMRC Online Services in order to be able to file their

company tax return online.

HMRC’s free filing service cannot be used to file the tax return and so commercial

software must be used.

The company does not need to register with Companies House (unless it has a

permanent establishment in the UK)

Agents acting on behalf of a company will be required to obtain new authorisation.

Corporation tax rules for the preparation and submission of the company tax return will

apply in full, subject to the transitional arrangements we have referred to above.

The first accounting period for Corporation Tax will start on 6 April 2020 and will normally

end on 5 April 2021, unless accounts are drawn up to a different date (in which case

HMRC must be informed in writing).

Non-resident companies will not be required to register for corporation tax for an

accounting period if any liability to corporation tax is fully offset by tax deducted under

the Non-resident landlord scheme (and the company does not have any chargeable

gains).

Income tax payments account in the 2020-21 period are not required where the

company does not expect to have any income other than UK property business income.

Note that the HMRC guidance presently states that “instalments for very large companies” do

not apply in the first period following transition, but our understanding is that the whole of SI

1998/3175 does not have effect and so large company instalments will not apply either (refer

to FA 2019 Sch 5 para 48).

SA700 2020-21

We have received confirmation from HMRC that the form SA700 will continue to be used for

non-property income for the 2020-21 tax year and beyond. This version of the form is yet to

be published, however our expectation is that it will be the same as the current form with the

furnished holiday lettings and property pages removed, and so the following sources of income

will continue to be relevant:

Income from trading in the UK – other than through a UK permanent establishment

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Offshore receipts in respect of intangible property (newly added for the 2019-20 form)

Other UK income (for example, royalties or income from trusts)

The general Company or other entity details, Tax calculation (optional) and Additional

information sections would also remain.

In Alphatax, we have taken the view that UK property income forms the focus of the majority

of non-resident company computations and so the default position is that these companies will

be transitioned to corporation tax rules. We are aware that for non-resident companies without

UK property income this transition would not be appropriate as they would need to continue

submitting an SA700. In addition, our understanding is that it is possible that a company with

UK property income and other income would be required to submit both a CT600 and an

SA700. Our intention is to include changes supporting these points – which we anticipate will

be based upon a new company type flag on the Standing data input statement – alongside the

new-look form SA700 2020-21 in the V21.0 edition of Alphatax which will be due in Q2 2021.

Note that the 2019-20 version of the form SA700 will be included in the V20.0 edition of

Alphatax which will be due in Q2 2020.

Structures and buildings allowances

The announcement of the new Structures and buildings capital allowances was made in Budget

2018; however, the introduction of this legislation did not follow the usual route of being

included in the following Finance Act 2019. Instead, an enabling provision was included in that

Act that would allow Government to introduce this allowance via secondary legislation. Due to

the relevant timings, we released the previous edition of Alphatax, V19.0, with new structures

and buildings allowance statements that were based upon draft legislation.

The secondary legislation for this allowance was subsequently enacted on 4 July 2019 as The

Capital Allowances (Structures and Buildings Allowances) Regulations 2019 – SI 2019/1087.

This statutory instrument inserted a new Part 2A into CAA 2001. For this edition, we have

undertaken a review of this final version of the legislation to ensure that our Alphatax

statements are applying the correct treatment.

We have made two changes as a result of this review:

The Date of qualifying expenditure field was previously referred to in Alphatax as a

‘memo’ input, meaning that the field was available to be used for information purposes,

but that it would not affect the calculation. However, the final legislation at

s270AA(2)(b)(ii) is worded in such a way that this date now affects the (50 year) tax life

end date of the structure or building. We have accordingly removed the reference to this

being a memo input, and any date entered will now impact the tax life end date of the

asset.

Alphatax provides several date inputs that control the initial availability of allowances. We

previously took the view that these same dates did not need to be reported in every

subsequent period during which allowances were available. However, the XBRL tagging

taxonomy includes two tags for the date of acquisition and date of first use, and we have

confirmed with HMRC that these are intended to help identify items of expenditure.

Therefore, we have amended our report statements to present these dates in all periods,

rather than just the first.

In addition, we have updated the Structures and buildings allowances page in our Help system

so that it fully aligns with the final version of the legislation.

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5. Returns and e-filing

CT taxonomy changes

For this edition we have updated Alphatax to support the CT Computation 2019 taxonomy

which includes XBRL tags and dimensions for the following areas:

Non-resident company disposals – new asset type dimensions have been added to

the Asset type analysis field on the capital disposals input statement for Non-resident

direct disposal of UK land and Non-resident indirect disposal of UK land. These

new dimensions now replace the Disposal of an interest in UK land by a non-

resident? field included in the previous release.

In addition to these dimensions, new tags have also been included for costs and

indexation on a 2015 valuation basis and on a 2019 valuation basis. Alphatax will apply

these tags automatically for disposals with the relevant asset type set.

IFRS 16 adoption adjustments – new tags have been added for trade tax adjustments

that arise as a result of the adoption of IFRS 16, which relates to accounting for leases.

We have added corresponding inputs to the XBRL analysis sections of the accessory

statements for the Adjustments analysis, Income adjustments and Expense adjustments

input statements.

Note that Alphatax includes an Adjustment spreading (IFRS 16) free-format template

that is designed to assist with calculating the amount of any adjustments and tracking

them across future periods.

Public infrastructure exemption – we have added the two new tags to the Corporate

interest restriction report statement. An ‘exemption claimed’ tag is included where the

Company is a qualifying infrastructure company under s433 TIOPA 2010? flag is

set to Yes on the Group information input statement. The amount of tax-interest

expense that is entered as exempt is now also tagged.

Detailed profit and loss account

We have corrected an e-filing issue where the Dimensional analysis statement was used

in conjunction with the Environmental costs row on the Detailed profit and loss account

statement. The resulting XBRL tag was previously missing the required non-default

dimensions defined in the XBRL taxonomy, and so in some situations was causing an e-

filing failure due to inconsistent duplicate tags.

We have made a minor amendment to the narrative of the Staff costs / employee

benefits expense heading on the Detailed profit and loss account input statement, adding

”OR”, to make it clearer that this section should only be completed if you are not

breaking down the staff costs between directors and non-directors under the equivalent

other headings. Doing so can lead to failures when e-filing. An equivalent change has

also been made to diagnostic ID 1405 which tests for this issue.

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Miscellaneous e-filing changes

Alphatax XBRL account import validations have been updated in line with the latest

published statutory accounts taxonomies.

We have addressed a rounding issue that could affect the total amounts surrendered as

group relief for carried forward losses in box C185 on page 5 of the CT600C in some

scenarios. The amount surrendered must be allocated between relevant loss streams

available in the computation, and in some computations where translation mode is

enabled the sterling to currency translation can lead to a minor rounding difference. Any

rounding differences previously appeared in the total in box C185, which would produce

an e-filing failure as the total did not equal the sum of the components returned in boxes

C160 to C180.

In this Alphatax version we are now applying the approach that was previously taken

with the equivalent group relief boxes on page 3, whereby the total returned in box C185

will always be the sum of the component boxes.

We have now added the ManagementExpensesBalance XBRL tag to the post-1 April 2017

carried forward amount on the Excess management expenses report statement, making

use of the Pre-lossReform and Post-lossReform dimensions to distinguish this from the

pre-1 April 2017 equivalent value.

In addition, for life assurance computations we have resolved an error with the use of the

same XBRL tag for long-term business fixed capital management expenses by adding the

required ManagementExpenses business type dimension.

We have corrected an issue with the date context applied against the patent box-specific

PatentBoxAdjustment2016RelevantIPLossesRIPLBroughtForward tag which

previously caused an e-filing failure in some scenarios.

15

6. Specialist companies

Creative industries

We have corrected a display rule issue applying to creative industry trades in the unusual

scenario where a user created and populated the first period of an Alphatax computation,

and then subsequently created a preceding period. Entries that had been made in the

Total income accounted for in pre-Alphatax periods and Total costs accounted

for in pre-Alphatax periods inputs in the latter period were incorrectly hidden. These

rows will now be shown allowing the user to remove the entries; the appropriate

balances will be carried forward from corresponding entries in the preceding period.

We have addressed an issue with the calculation of Trading losses available as a

deduction at Step 2 - available reliefs against total profits in the carried forward loss

restriction calculation, which affected certain creative industry scenarios. In scenarios

where the trade:

o was in a completion or later period,

o had both pre-completion losses brought forward and current period losses, and

o was surrendering group relief,

Alphatax incorrectly removed the full amount of group relief surrendered rather than just

the portion that related to the current period loss. Relief for these brought forward losses

– that are treated as losses of the current period for the purposes of s37 and group relief

under the creative industry rules – fall within the s269ZD restriction, and so these loss

amounts are excluded from qualifying profits under s269ZF.

We have not added an application date for this change on the basis that the calculation is

only relevant for periods ending on or after 1 April 2017 and this is a rare scenario. Users

who had noted this issue were previously advised to use the Override input provided, in

which case their computation will be unchanged in the new edition.

Banking companies

An issue was discovered whereby in certain scenarios the bank loss restriction calculation

performed by Alphatax was incorrect, resulting in a lower amount of brought forward

losses being offset in the period.

The issue arose when allocating the calculated restriction between more than one trade

where at least one of the trades was loss-making and had pre-2015 losses brought

forward. Part of the restriction was incorrectly being allocated to these trades even

though they did not have profits against which losses could be used.

The default position has been corrected, with the relevant change being applied for

periods of account ending on or after 31 March 2019.

16

Real estate investment trusts

In the previous edition we introduced a new Is this property business tax-exempt

under the REIT provisions? flag on the trade Accounts adjustments input statement

that can be used in order to derive the tax adjusted profit or loss of the tax-exempt

business, including considering adjustments such as capital allowances.

For this release we have extended this functionality to feed into the corporate interest

restriction calculations in order to automatically derive amounts of tax-interest income

and expense, and adjusted corporation tax earnings of the tax-exempt business.

Previously, and where there were no tax-exempt trade present in the residual

computation, inputs were presented on the Corporate interest restriction and Adjusted

corporation tax earnings input statements for these amounts to be entered. Alphatax will

now use links to automatically populate these same fields with amounts derived from the

tax-exempt trade.

Certain display rule changes made in respect of adding the Is this property business

tax-exempt under the REIT provisions? flag in the previous version had the

unintentional effect of suppressing the Foreign permanent establishment exemption

inputs on the trade Accounts adjustments input statement for trades marked as branches

where there was no main trade in the computation. We have revised the display logic to

reinstate these inputs in this scenario.

Partnerships

In Alphatax UK version 18.1 we added new rows to the Partnership statement, where the

computation was drawn up under income tax rules, that would optionally allow the

amount of any Net capital allowances claimed in any trade or property business to be

allocated between partners for the purposes of supporting a claim for sideways loss relief

against general income under ITA 2007 s120.

Where the Enable profit sharing arrangement percentage inputs on Partnership

statement? flag on the Configuration options statement was also set to Yes however,

the corresponding unreconciled amount for this row was incorrect which resulted in a

diagnostic that could not be cleared. In addition, allocations were being calculated based

on the overall profit-sharing ratios entered for the partnership which was not expected

for rows that are described as optional.

We have now addressed these issues in this release. The specific allocation fields for the

individual rows should be used to control the allocation when the rows are being used.

We have addressed an issue whereby the total amount of capital allowances claimed in a

trade was being incorrectly translated on the partnership tax return for computations

where round thousands translation mode was enabled.

17

Life assurance companies

Capital allowances

Having received clarification from HMRC on the effect of LAM15000 within the newly

published updated life assurance manual, we have now disallowed the deduction of

investment assets capital allowances from BLAGAB trade profit by default in periods

ending on or after 31 December 2018.

The Allow deduction of investment assets capital allowances from BLAGAB trade

profits? flag on the Life assurance options input statement can be used to reverse this

default treatment if desired.

Non-BLAGAB capital loss offset against shareholders’ share of BLAGAB gains

In accordance with the Life assurance manual 2019, non-BLAGAB capital loss offset

against shareholders’ share of BLAGAB gains should be deducted in Step 6 of s73 2012

after E has been deducted from I.

In periods ending before 31 December 2018 the offset in Alphatax was made in Step 2 –

BLAGAB chargeable gains in. The I-E computation report statement has been amended

accordingly and the offset has been moved to Step 6. The underlying calculation of the

offset has not changed. Following consultations with HMRC, the amount of the offset may

need to be amended in future releases.

In addition, we have improved the policyholder share calculation for s210A purposes. The

calculation ignores the set-off of non-BLAGAB losses. However, previously, when

calculating the adjusted amount of BLAGAB trade profits for this purpose, the deduction

of the policyholder deferred tax was based on the amount per accounts. Since the

deferred tax could have been different when the non-BLAGAB offset is ignored, we have

now provided for an override in the Policyholder share calculation for s210A

purposes section of the Claims – chargeable gains and losses input statement.

Miscellaneous life assurance changes

We have resolved an issue with diagnostic ID 1053 “Profits chargeable to corporation tax

[box 315] does not agree to the amount of taxed profits [boxes 335, 350, 365, 385, 400,

415]”. In previous editions the diagnostic could display incorrectly in some scenarios

where foreign tax expensed was deducted from I-E profits.

We have amended a disclosure issue on the Restrictions on group relief carried forward

input statement where in periods straddling 5 July 2018 the restriction referred to

modified loss cap in the first notional period but did not show the row with the restriction

referring to the relevant maximum in the second notional period.

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7. Miscellaneous changes

Carried forward loss restriction

Group allowance allocation report

For the previous edition we added an option to prepare the Group allowance allocation

report that must be submitted to HMRC within the nominated company tax computation.

We have now made a minor change to the display logic for this report statement to

ensure that the report displays whenever the Ready for submission? and Is the

company the nominated company? flags are set to Yes on the Deductions allowance

input statement, regardless of whether any allocation has been made by the nominated

company to other companies in the group. If the nominated company has not assigned

any of the deductions allowance, the Group allowance allocation report will now be

shown, where previously it was not.

CTM05200 confirms that the Group allowance allocation report statement is not intended

to be included within the final tax computation of the nominated company, rather it is a

separate report that should be included either as an attachment to the company tax

return, or submitted directly to HMRC. Alphatax will accordingly print suppress this report

statement in the contents tree by default. Users may enable this report if they choose to.

Corporate interest restriction

We have made a minor display change to the Corporate interest restriction report

statement to improve the presentation where a company has both a disallowed amount

and a reactivated amount in the same accounting period.

Capital allowances

We included a new Transfer out at TWDV field on the s940A transfers input statement

in Alphatax UK 18.1 that allowed assets transferred into a company and then out in the

same period to be reflected correctly.

For long period of account computations however, the amount of any transfer out that

was taken to the disposals analysis section of the Fixed assets statement was incorrectly

double counted. We have now addressed this issue for all periods.

In the previous edition we updated the rate of the special rate pool writing down

allowance from 8% to 6% in line with changes included in Finance Act 2019. The

equivalent change for the ship pool was accidentally omitted, however. We have now

rectified this.

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Capital disposals

We have amended the use of page breaks on the Capital losses summary report

statement to correct an issue whereby the first page of the summary report could be

blank when printing the computation.

We have resolved an issue for scenarios where the Capital disposals input statement was

used for a disposal of shares first purchased after the date indexation allowance was

frozen on 31 December 2017. A diagnostic advising the user to review the RPIs for the

operative events was previously being displayed and could not be cleared. The indexation

calculation is not relevant for such disposals, and so this diagnostic will now no longer

appear in this scenario.

Very large instalment payments

The Compliance Cycle Management (CCM) screen in Alphatax includes a column for Tax

O/S that shows tax liability outstanding for each company. This column is furnished with

a warning icon that will appear where a payment is due within 14 days. In previous

editions however this warning icon was not appearing correctly where the company was

liable to pay instalments as a very large company. We have now resolved this issue.

We have created a new standard report template QIPS payments by very large

companies that can be used to report on the tax liability and payment schedules of

companies listed in the CCM that are subject to very large instalment provisions.

In addition, we have also renamed the existing Companies paying by QIPs report to

QIPS payments by large companies and updated the report to ensure that very large

companies do not appear.

Other miscellaneous changes

We have amended the placement of the Disallowable trade reconciliation free-format

statement in the contents tree upon inserting into a computation. The statement will now

appear under the trade Adjustments analysis statement rather than under Expense

adjustments.

Users may move this or any other free-format statement to a location of their choice by

clicking the name of the statement in the contents tree, holding the “Ctrl” key and

dragging the statement.

We have corrected a calculation issue on the trade-level Short life assets input statement

which could in some cases cause the statement to continue to carry forward post disposal

where there were no carried forward balances.

We have corrected an issue whereby a footnote entered in the Adjustment field for

post-1 April 2017 losses brought forward on the trade Losses input statement was not

correctly displayed in report mode.

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The Non-trade loan relationship deficit carried forward row in the post-1 April 2017

section of the Non-trade financial losses report statement previously cross referenced the

Carried forward amounts report statement even where there was no deficit carried

forward. We have improved this disclosure and ensured that the same approach is

adopted across the main loss report statements (being trade, excess management

expenses and intangibles). The cross references now appear only where there is a

balance either brought forward or carried forward at the end of the period.

We have made minor updates to our tax agent toolkit statements in Alphatax to reflect

the latest published versions from HMRC.

We have corrected a presentational issue inadvertently introduced in the previous version

which caused the non-trade intangible fixed assets disposal proceeds row to be omitted

from the Fixed assets report statement.

8. System changes

Miscellaneous System changes

We have resolved an intermittent issue with the Help system on the Hosted Service

which could cause the help to become unresponsive.

We have corrected an issue that caused Alphatax to print two copies of the computation

to PDF when users selected the option to print both the computation and return. The

issue only occurred in scenarios in which the username included an underscore (“_”).

This issue was previously resolved for Alphatax Enterprise Hosted customers in an earlier

update.

The e-filing folder and its contents are system files and should be included in the root

Alphatax folder, rather than as part of template parent. Where the e-filing folder only

resides within the template parent folder Alphatax will now provide a warning stating that

relevant files cannot be found.

The number of times that the Alphapack Client login dialog will continue to prompt for a

login and password in the event of failure is now configurable. The number of attempts is

controlled by a new value in the j2registry called AP_PASSWORD_MAX_ATTEMPTS. As

standard, this is set to 5 attempts.

The file tcslct.sml has been removed from the Alphatax solution. The file relates to the

submission of accounts in 2009 and earlier periods only.

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9. Optional modules

Accounts Analysis

Accounts Analysis for Accounts Integration templates

The Accounts Integration function in Alphatax can be used to define templates that map a list

of accounting codes into Alphatax input fields for the purposes of being able to quickly and

seamlessly import accounts data into the tax computation across a number of companies.

As part of this function, Alphatax will save applicable Accounts Analysis configuration options

at the time the mapping template is created to ensure a consistent approach between

computations in terms of the import process and subsequent reporting in the computation.

A small number of options were previously unintentionally omitted from the saving procedure,

and so for this edition the following configuration options will be saved in new Accounts

Analysis for Accounts Integration mapping templates:

Separate Profit and loss account and Balance sheet headings for Accounts analysis

reports?

Always include Profit and loss account reconciliation statement?

Display prior year comparison figures in report mode?

Use alternative university format Profit and loss account?

Miscellaneous accounts analysis changes

We have amended the Go To link for diagnostic ID 1034 “Turnover entries are required

for the CTSA return” such that, in computations where accounts analysis is enabled, this

link will now take users to the Turnover row on the Profit and loss account input

statement where this input can be made, rather than to the equivalent row on the Profit

and loss account reconciliation input statement where a linked amount for the turnover

entered is returned.

Tax Accounting

We have suppressed the Rounding difference row on the trade and non-trade Share

scheme deductions and SIP deductions report statements where the tax accounting

statements are print suppressed. This row is relevant for the purposes of the Permanent

difference column only, which specifically relates to tax accounting.

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Group

Transfers of chargeable assets

In previous versions, the gains and losses returned for companies on the s171A transfers

statement were incorrect for certain types of disposals, such as loss-making share pool

disposals subject to the substantial shareholding exemption or assets subject to the

chattel loss restriction. We have reviewed this area and amended the disclosure to

ensure that gains and losses are displayed correctly in all scenarios.

Note that the numbers returned on the s171A transfers statement are included as a

guide when considering notional transfers within the group. The gains and losses

themselves, and any notional transfers applied, are calculated and reconciled in the

company computations and here the calculations were correct and have not been

changed.

Corporate interest restriction

We have addressed an issue whereby it was previously not possible to populate the

Excess debt cap for the preceding period field on the Interest capacity input

statement for the first period of a group computation.

Tax Pack

We have amended the Profit and loss account sheet in tax pack to reflect some minor

updates that had been included on the Alphatax version of this statement, such as the

display of the Tax relating to other comprehensive income row and the value used

for the Overseas income row.

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Compliance Cycle Manager

We have added a new Include Node Path in Window Title option to the View menu of

the Compliance Cycle Management window.

Enabling this option will cause Alphatax to display the node before the name of the

company in the window, which can provide additional useful context when working with

company computations across a number of different nodes:

We have added an option to Open as read-only… company computations from the

Compliance Cycle Management window.

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10. Appendix 1: IT help and guidance

We note below some items that you may wish to call to the attention of your IT department

when installing the latest version of Alphatax.

Item Summary

The Alphatax E-filing

folder must be in the

application folder

The e-filing folder and its contents are system files and should be

included in the root Alphatax folder, rather than as part of template

parent.

Where the e-filing folder only resides within the template parent

folder Alphatax will now provide a warning stating that relevant

files cannot be found.

Microsoft have ended

support for SQL Server

OleDb driver

Microsoft have indicated that they will no longer update the SQL

Server OleDb driver (sqloledb) with new features; this was

previously the sole provider used by Alphatax.

With this release we have also added support for the latest

Microsoft OLE DB Driver for SQL Server (msoledbsql). If you use

Microsoft SQL Server, then we strongly advise that you download

this replacement driver which is currently being maintained and

supported by Microsoft. Using the new driver will also allow you to

take advantage of the improved security features of TLS 1.2.

This driver must be installed on every workstation for Alphatax to

access the database.

The replacement driver can be found here:

https://www.microsoft.com/en-

us/download/details.aspx?id=56730

Further information can be found here:

https://docs.microsoft.com/en-us/sql/connect/oledb/oledb-driver-

for-sql-server?view=sql-server-ver15.

Once the driver is installed on each workstation the only change

required is to update the Database Provider entry in each user’s

tcsldb.ini file from:

[Database]

PROVIDER=sqloledb

…to…

[Database]

PROVIDER=msoledbsql

Microsoft have ended

support for SQL Server

2008/2008 R2

Microsoft ended support for SQL Server 2008/2008 R2 on 9 July

2019. In line with this action we are withdrawing support for SQL

Server 2008/2008 R2 from this Alphatax edition. From Alphatax UK

19.1, Enterprise Manager will not allow you to create an Alphatax

database or update an existing Alphatax database when using SQL

Server 2008/2008 R2.

Please contact Tax Systems Support if you have any queries regarding the above.

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11. Appendix 2: Security penetration testing policy

Tax Systems takes a risk-based approach to security testing; it is important to prioritise

threats and vulnerabilities based on their likelihood of being exploited. As such external threat

actors and entities will be prioritised over internal, or insider threats.

The scope of penetration testing was previously limited to testing the external facing elements

of our Corporate Infrastructure, hosted products and services and those elements of our

products that customers may make available externally.

As a result of customer feedback, from January 2020 this has been revised to broaden the

scope to include threats from non-expert internal threat actors. Future penetration testing

engagements will include testing for spoofing, tampering, information disclosure and escalation

of privilege for internal users of our products and services.

It is expected that the testing will include, where appropriate for the type of test:

Intelligence gathering using publicly available sources.

Network mapping.

A vulnerability assessment (scanning).

Identifying and exploiting vulnerabilities using manual techniques. (But non-

destructive/disruptive in nature).

Identification of root cause of vulnerability.

Testing will be performed on Production systems where available or in the case of Products

typically hosted on-premises, in production-like setups.

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Tax Computer Systems Limited

Magna House, 18 – 32 London Road,

Staines-Upon-Thames, TW18 4BP

T: 01784 777 700

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Copyright © 2020 Tax Computer Systems Limited

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