PBR05: Competitiveness not enhanced says PwC

This afternoon’s pre-Budget report was ‘disappointing’ as it contained ‘few
developments to enhance the UK’s competitiveness from a tax perspective, a
PricewaterhouseCoopers partner has said.

Richard Collier-Keywood, UK head of tax at PwC, said: ‘We are disappointed to
see few developments in this PBR that will enhance the UK’s competitiveness from
a tax perspective.’

He added that the administrative burden for business seemed to have increased
‘again’ as the tax avoidance disclosure regime would be extended to ‘catch what
would appear to be legitimate tax planning’.

‘The action on avoidance was expected, but there needs to be consultation to
ensure clarity and certainty. A number of the recent provisions have introduced
purposive tests without the ability for business to seek a clearance so that
they can be certain of their position.

‘It is unlikely that taxes can be increased sufficiently by cracking down on
avoidance. Incentives are necessary for overseas businesses to invest here so
that the UK can increase its tax base.’

John Hawksworth, head of macroeconomics, said: ‘The chancellor has revised up
his current budget deficit estimate from £6bn to £10bn this year. He expects
this to return to zero by 2007/8 but most independent forecasters would consider
this to be relatively optimistic.’

‘The chancellor is proposing to extend the turnover threshold for certain VAT
simplifications from £1m to £1.3m,’ added Patrick Walker, head of indirect

‘This is another sign of the chancellor’s determination to ensure that
smaller businesses are not overburdened with VAT compliance obligations and that
there is increased flexibility available.’

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