THE BUSINESS TAX regime should be scrapped and replaced with a “lowish” tax on distributed income, according to City AM editor Allister Heath.
Writing in the Telegraph, Heath calls the current system of business taxation “mad and indefensible”, with corporation tax being particularly unfair due to the offsets that some companies can make against their profits.
His comments come in the wake of multinationals’ appearance in front of the Public Accounts Committee, including Starbucks (pictured), over concerns that they use complex structures and techniques to avoid tax.
“The result is an incoherent, nightmarish tax that is clearly not fit for purpose and increasingly regular show trials, where legislators berate companies for following their own legislation but are unable to suggest any sensible reforms,” said Heath.
Instead, a levy on income distributed to investors, which would include dividends, share buy-backs and interest payments, should replace the current business tax regime.
“This new levy would capture and tax just once all income generated from UK-based economic activity, dramatically reducing avoidance as well as the present double, triple or even quadruple taxation,” said Heath.
“Cash flows to investors from UK-generated activity would be taxed, not ‘profits’, so incentives to manipulate would disappear.”
Phillip Gershuny, senior tax partner at Hogan Lovells, outlines how a European exit could affect UK taxes
London accountancy firm Blick Rothenberg warns of potential damages VAT changes could cause UK businesses
Two PwC whistleblowers and journalist to stand trial over alleged leaking of corporate tax documents
Governmental pressure to crack down on tax evasion is resulting in HMRC applying its criminal investigation policy in an inconsistent manner, writes Kingsley Napley's David Sleight