Controlled foreign companies talks kick off

The coalition government has kicked off a raft of consultations in efforts to hammer out solutions to some of the UK's most contentious tax issues.

The way UK-based multinationals use income in low-tax jurisdictions has been a major sticking point for several years and the new government has made good on its promise to address the situation by starting an informal consultation about controlled foreign companies.

HM Revenue & Customs is jointly handling the consultation with the Treasury.

Senior figures from Anglo American, British American Tobacco, Xerox, IBM, Intercontinental Hotel Group, Rolls-Royce and Aviva have been drafted into a working group operating alongside the consultation.

However, a warning was also issued by the government that any proposed changes would not short-change the UK's tax coffers by eroding the tax base.

HMRC and the Treasury also opened a discussion document which proposed moving to a "territorial" treatment of foreign company taxation rather than basing it on ownership.

A working group including representatives from BG group, BP, HSBC Sony and Standard Chartered has been set up to discuss options and proposals in more detail.

In total, the Exchequer Secretary to the Treasury David Gauke MP published nine documents for discussion and consultation relating to tax, following commitments made in the June Budget.

In addition to the foreign branch taxation discussion and informal consultations on CFC interim improvements, issues being discussed include PAYE reform, furnished holiday lettings, pensions tax relief, associated company rules, disclosure of inheritance tax avoidance and modernisation of investment trust company rules.

Gauke said: "We want to make the tax system simpler and work better for the taxpayer.

"By reducing burdens, making the right choices and involving taxpayers, we are
sending a very clear signal that Britain is open for business."

"I want to encourage relevant parties to provide their feedback
on the tax consultations that we have published today."

Further reading:

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