Treasury ends double taxation consultation

A CONSULTATION on combating tax avoidance arrangements that exploit double taxation arrangements has been cancelled because of the uncertainty the proposals will make for UK compliant businesses.

Responses to the consultation, which was released on 1 August, have made it clear that its intended scope and effect will create significant uncertainty.

Double tax treaties provide investors with assurance that they will not be taxed in two countries. Instead of the proposals, which set out a wide ranging strategy, the government will instead tackle avoidance by challenging specific tax avoidance strategies, Exchequer secretary to the Treasury David Gauke (pictured) announced last week.

Chris Sanger, head of tax policy at Ernst & Young, said that the government's decision to end the consultation should be welcomed and prove that ministers are committed to transparency. This decision would be "greeted with a sigh of relief", he added.

"Had the government's proposals gone ahead, UK competitiveness would have been eroded. It would have hit commercial transactions by restricting access to funding markets and hiked up the costs of investing into the UK," Sanger said.

"The Coalition pledged to take a more consultative approach to tax policy making and, from this volte face, they seem to be living up to their mantra," he added.