PwC international tax partner Peter Cussons said the consultation paper Large Business Taxation: The Government’s Strategy and Corporate Tax Reforms was ‘good news for UK plc’.
‘The proposals will go someway to ensuring the UK has a modern and competitive system of taxation to encourage investment and growth,’ Cussons said.
In particular, he praised Gordon Brown’s plans to exempt companies from capital gains tax on the disposal of substantial shareholdings.
The CIOT said the new proposals showed the value of consultation provided ‘all parties are receptive to different views’.
In particular, it welcomed the deferred relief for gains on substantial shareholdings, the result of two rounds of negotiations.
Under the new proposal relief would provide for chargeable gains to be deferred where a qualifying shareholder company realises a gain on the disposal of shares in that company, and reinvests the proceeds by buying shares or assets in another qualifying investee company.
Otherwise, ‘the original proposals for deferral would have been very difficult to operate in practice,’ the CIOT’s Oratore said.
Both PwC and the CIOT recognised the efforts made in simplifying the current legislation. The CIOT said the government showed it was prepared to consider a simpler, less restrictive defintions.
But the praise was not without exceptions. PwC expressed concern that the modernisation of intellectual property tax was falling behind corporate tax reforms and urged the chancellor to include them in his next Budget speech.
And it said the proposed 20% threshold on exemptions on gains on substantial shareholdings would prove ‘too rigid’.
The latest proposals by the Treasury are part of Gordon Brown’s promise to simplify the corporate tax system and encourage investment and enterprise in British business.
Responses to the capital gains reform must be filed with the Inland Revenue by 1 October.
Brown to consult on CGT exemptions
Large Business Taxation – a proposal document