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Osborne should warm to Autumn Statement ‘themes’

THE AUTUMN STATEMENT appears to be edging ever-closer to Christmas; so much so, that in 20 years, there’s a real danger it may clash with the Queen’s Speech.

In spite of that, and yet another failure to acknowledge that the statement is now firmly a winter event, very little in the way of unusual measures are expected from the chancellor in this year’s address.

As has been the theme in this government’s previous Budgets and Autumn Statements, measures against tax avoidance are likely to be high up the agenda, with legislation against close company loans expected to be announced, although action against corporate debt and derivative contract abuses are likely to wait until after the election.

Not only that, though, HM Revenue & Customs could see its powers extended in avoidance. In particular, it has been mooted that early payment of disputed taxes in tax avoidance schemes could be introduced, with the monies returned should courts determine the scheme works. An extension of naming and shaming could be made to incorporate high-risk promoters of avoidance schemes, although practitioners note firmer definition of ‘aggressive schemes’ and ‘high-risk promoters’ is needed.

On a wider scale, the government’s plans towards the OECD’s moves against tax base erosion and profit shifting by multinational companies is expected.

Away from avoidance, the ICAEW is calling for VAT on home improvements to be dropped to 5%, although there are also cases being made for restaurants and catering, hotel accommodation and admissions to amusement parks, concerts and other cultural events to receive similar treatment.

The call from business is to help ease cashflow pressures as they look to capitalise on the recent signs of economic recovery. Particularly, the issue of late payments is high on business’s priorities, while many are also keen to see continued support in reducing costs, including a freeze on business rates until 2014.

For employers, some form of incentives for the training and employment of NEETs (people not in education, employment or training), while an extension of the real-time PAYE easements for small business could be made beyond April 2014, with some suggesting they could be made permanent.

In line with the employee-shareholder contracts pushed by the Treasury, further steps could be taken down the ‘John Lewis’ road, with additional tax incentives for employee shareholdings, although what form they may take is uncertain.

As far as employees are concerned, there is good news, with the government looking to eventually raise the personal allowance to £12,500. A step towards that goal should be made in this statement with the tax-free cap being raised to £10,500.

One criticism levelled at the chancellor is that these breaks are costing the Exchequer dearly. Indeed, Smith & Williamson calculates the increase in the personal allowance to £10,000 has cost £1bn, while the married couple allowance commanded £600m and the new allowance for national insurance worth £2,000 for employers costing £1.2bn.

It is not thought there will be any left-field, unforeseen announcements to be made on 5 December, with the government instead looking to gain traction in its core policies of encouraging growth and maximising tax take. The government has been known to make rabbits appear in autumn, whether it can in winter remains to be seen.

You can follow all the developments of the day here at Accountancy Age.

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