BDO pre-Budget poll: what were the findings?

BDO has recently revealed the results of their pre-Budget poll, in which their clients completed a survey focused on this year’s predictions for Monday 29 October.

It is unsurprising that a large amount of business leaders have outlined a clear wish to see Brexit negotiations finalised before any significant tax changes are introduced by the government. In fact, 59% of respondents claimed that finalising a deal is “the single most important action that the chancellor should take to boost the British economy,” BDO reported.

The firm’s report continued: “The government must prioritise securing a Brexit withdrawal agreement, and a defined transition period to restore business confidence.”

The finalisation of the Brexit deal has seen a 36% rise in the rated level of importance when compared to BDO’s 2017 survey – a clear indication of how ongoing uncertainty is an increasing concern for both businesses and the public. This statistic far outweighs 2018’s second most popular action, where 23% of respondents argued that investment “in physical and digital infrastructure to improve productivity” is also of great importance.

Nonetheless, when asked in BDO’s survey, 54% of respondents said they were against a second referendum.

Other results of note include: 40% of respondents favoured a new environmental tax on single use plastics, and using that generated revenue to fund the promised £20bn for the NHS. Furthermore, 54% of businesses wanted the UK to take the lead on taxing the digital economy, and 56% outlined that they would support the simplification of the UK tax system, even if that did mean a rise in taxes.

Moreover, according to BDO’s report, “just 9% of businesses think increased government borrowing is the best way to fulfil the prime minister’s commitment to £20bn in additional NHS funding, with a broad consensus that this should be achieved by tax increases on corporates.”

The 40% in favour of a new environmental tax highlighted an increased focus in climate change awareness, coming ahead of taxing the digital economy (37%), and reversing corporation tax cuts (14%) when ranked in level of importance.

There has been a decline from 2017 in the percentage of businesses who want there to be a focus on the modification of complex tax codes; nearly two-thirds (62%) of businesses advocated this movement last year. This is “symptomatic of dampened confidence triggered by Brexit uncertainty,” the BDO report has claimed.

Despite the Office of Tax Simplification’s recent recommendation to withhold tax on behalf of workers, and to instead transfer to HMRC in a move that would ease the compliance burden faced by the gig economy, 57% of business leaders claimed that neither tax status or legal rights of the gig economy worker should be adjusted until after Brexit.

54% of those who completed the survey agreed that the UK should take unilateral action to impose new taxes on the global digital economy, whereas 36% feared that this would make doing business in the UK less “internationally competitive.”

BDO’s summary report continued: “Many multinational tech businesses have already warned the chancellor that they will cut investment in the UK if they are hit with new taxes.” It is clear that this is an ongoing issue that will not be resolved with a “quick fix” by the government.

Paul Falvey, tax partner at BDO, has concluded: “Businesses are looking for direction from the government, following a prolonged period of Brexit paralysis.

“Against this backdrop of uncertainty, there is little appetite for new tax measures until Brexit negotiations are complete.

“We need to see further engagement between Whitehall departments and businesses in order to prepare for the consequences of a disorderly Brexit, and to bolster the UK economy as it steers its way through a complex transition period.”