Advisers pensive over Forsyth Commission

Advisers pensive over Forsyth Commission

Although advisers were generally positive about the the Conservative Party’s Tax Reform Commission report, most of them raised concerns about some of the findings

After numerous calls by the Investment Management Association and HSBC, among
others, for government to simplify the UK tax system, one would have thought
that tax experts would have welcomed the recommendations of the Conservative
Party’s Tax Reform Commission.

The main thrust of the Commission’s 176-page report was to cut out tax
complexity without compromising fairness and, although advisers were generally
positive about the report, most of them raised concerns about some of the
findings.

Chris Sanger, head of tax policy at
Ernst & Young, said that he was
particularly concerned about the proposal to scrap research and development tax
credits in return for cutting corporation tax from 30% to 25%.

‘The abolition of research and development tax credits will hit small
companies at a time when they really need the cash,’ Sanger said.

Andrew Hubbard, director of tax at
Tenon, was also
concerned about over-simplification, which could see some tax payers paying even
more than they do now.

‘The technical detail and the manner by which a business calculates its
profits, if arbitrarily simplified, could actually mean paying corporation tax
on a larger sum. Introducing lower rates, but abolishing special incentives
could actually lead to some paying more tax,’ said Hubbard.

Hubbard also warned that proposals to extend taper relief on capital gains
could have serious implications for the private equity market, as capital gains
would be much higher after three to five years, the period when most private
equity groups pursued exits.

One point where experts were unanimous in their support was the proposal to
scrap stamp duty on UK shares. Advisers said the proposal was essential to
promote the UK as a leading financial centre.

‘The proposal for stamp duty in UK shares to be abolished is appealing to the
City which has been demanding this move for sometime,’ said Chas Roy-Chowdhury,
head of tax at ACCA.

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