Lord Howe: proposed Office of Tax Simplification

Tax clarity needed to stop businesses leaving the UK

Tax system needs to be simplified to stop businesses leaving the UK, according to tax advisers

Written by David Jetuah

Accountancy Age, 10 Jul 2008

Business needs the certainty offered by simplification of the UK tax system, according to tax advisers reflecting on the release of a report by former chancellor Lord Howe.

Lord Howe proposed an Office of Tax Simplification, a new cross-party committee to examine government proposals on tax, and a commitment to publicly flag up changes to tax law no later than the pre-Budget report.

The report followed announcements from several companies that they are leaving the UK because of the increasing burden and uncertainly of UK corporate tax.

Andrew Green, head of taxation in London at RSM Bentley Jennison, said: ‘We’ve got a very complex tax code and that’s the biggest challenge from a taxpayer’s viewpoint. What they really want is clarity, and it has tipped the scales for some businesses in deciding to redomicile. They need to understand their tax position.

There are a lot who have considered shifting to other jurisdictions in the past 12 months and tax is one of the first issues on the list.’

John Whiting, tax partner at PricewaterhouseCoopers said: ‘If you look at the wider context of the UK’s tax system, the way the system works is one of those factors that decides whether businesses stay or go. It’s not just “how much tax do I pay”, it’s “what about the system that surrounds it”.’

Shire and United Business Media both shifted their tax residences out of the UK, while others including advertising giant WPP, have threatened similar moves.

Lord Howe’s proposals, unveiled at the ICAEW’s headquarters in London, garnered much support from senior members of the profession. Allen Blewitt, ACCA’s chief executive, said: ‘They are sensible measures that aim to tackle the unfairness and uncertainty surrounding the UK’s tax regime.’

ACCA research put the UK’s regime bottom of the league table for tax fairness and transparency.

ACCA members who were polled said the UK’s tax arrangements were ‘compli cated and frustrating, but most importantly, they said there was a lack of trust in the system from business and personal taxpayers alike.’