Power boss blasts UK tax regime

Steve Lucas, FD of National Grid

The finance director of National Grid has become the latest senior figure to criticise the UK’s corporate tax regime, as the government enters a make-or-break consultation into its foreign profits plans.

Steve Lucas told Accountancy Age this week that the UK is ‘uncompetitive’ on tax.

‘Frankly the UK is uncompetitive. The trend [of business moving their tax bases offshore] is not at all surprising,’ said Lucas. ‘Our assets are rooted to the ground here so we’re very highly regulated. Our regulators would take a very dim view of us moving our tax base.’

National Grid is the 12th largest taxpayer in the UK, Lucas said, and his comments come as the Treasury comes under huge pressure to perform a U-turn on its plans to tax the foreign profits of UK multi-nationals.

Chancellor Alistair Darling and other Treasury ministers were on a charm offensive this week to persuade businesses of the impact of the proposals, saying that their plans were ‘revenue-neutral’ and that the government was considering the impact of the reforms carefully.

The government announced the make-up of its high-level committee to mull over the proposals this week.
Where it had previously called in tax directors from some of the largest multi-nationals to discuss the new rules, the new committee features CFOs including Dr Byron Grote of BP and Rolls-Royce’s Andrew Shilston.

A group of economists, from the CBI, the TUC, Oxford University and HM Revenue & Customs, are also on board. Its first meeting is expected to be in June.

Advisers were surprised that some major critics of the government were not on the committee.

Referring to the consultation in general, Deloitte’s Bill Dodwell said: ‘I think it has been handled badly but if we end up with a different policy that will be a victory rather than a climbdown.’

The government faces weeks of intensive lobbying from big business before announcing its final plans before the summer recess.

‘[The passive income rules] would be compliance heavy because you will have to hunt around for
that “bad” income and separate it from the “good” income,’ said John Cullinane, Deloitte’s financial services partner.