With Gordon Brown determined to raise as much money as possible in the Budget, while steering clear of headline-grabbing tax rises, anti-avoidance legislation has played a hugely important role in his legislation.
This culminated in an emergency meeting last week held by the Treasury with representatives of the Big Four. According to PricewaterhouseCoopers ð for whom former ICAEW president Peter Wyman attended ð the meeting was called to ?discuss attitudes towards tax avoidance?.
Further meetings were held yesterday to for the Treasury to thrash out the rules of disclosure for tax avoidance schemes.
However, the most recent ECJ ruling could lead to the government having no choice but to ‘reduce the corporate tax rate, make it more competitive and listen more to what business wants’, according to Christopher Morgan, head of the EU tax group at KPMG.
‘If you are a major plc and are getting all this grief, why not go to Ireland?’ asked Morgan. ‘I can see companies moving subsidiaries out of the UK. When they want to get profits out of the UK it?s one way of doing it.’ Morgan said that he was aware of a ‘couple of major companies’ that has already touted the possibilities of taking their business elsewhere.
The ECJ ruling was handed down last week, and ruled that the French government could not impose an exit tax on a French national transferring his tax residence out of the country.
Peter Cussons, international tax partner at PwC, said that while the decision would have ‘implications’ on the periphery, the ruling is not the tax equivalent of ‘Armageddon’.
‘While Ireland has an attractive tax rate, not many corporations will migrate directors and senior staff permanently,’ said Cussons. ‘But it does open the door and puts down a marker.’
Does Darwin's theory apply to taxation? Colin ponders...
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