Following its high-profile hearings involving the biggest names in the
private equity industry, the
Select Committee today called on the government to review the
taxation and transparency of the industry.
In its long-awaited report following the hearings, the committee released an
interim document where it focused on the controversial issues of interest
relief, disclosure and non-domicileds working in private equity.
On the issue of transparency and disclosure the committee said that because
the industry had grown so rapidly and owned so many mainstream brands and
businesses it needed to improve its reporting and corporate governance.
The committee also put pressure on the Treasury and HM Revenue and Customs to
reveal the results of its review of non-dom tax rules, which allow foreigners to
be exempt of tax on foreign earnings.
‘We are now asking the Treasury to inform us of the outcome of the review
carried out in 2003 of the residence and domicile rules as they affect the
taxation of individuals. HM Treasury and HM Revenue and Customs need to
demonstrate a rigorous approach to claims of non-domicile status,’ said
committee chair John McFall.
McFall also said officials need to ‘examine whether the tax system unduly
favours debt as opposed to equity, thereby creating economic distortions’.
The report made no firm recommendations, however, as the committee is
planning to hold further evidence sessions on the topic before producing a final
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