Almost one in five finance directors fear their organisation will lose out as a result of the abolition of advanced corporation tax in April.
But the overall response was muted, with 65% of the 210 FDs questioned in this week’s Accountancy Age/Reed Accountancy Personnel The Big Question survey saying their companies would not be hit.
Under current rules, companies are entitled to offset ACT, which is paid on dividends, against their year-end corporation tax liabilities. Businesses and charities right across the board are among those fearing the worst from the abolition, with an organisation’s cash flow firmly in the firing line.
Financial services businesses would be affected, according to Bruce Balicki, FD at Seevic College. ‘There will be an indirect effect through pension companies losing out on tax credits,’ he said.
Investments are also likely to suffer. ‘It will be on a sliding scale concerning our equities investments; that would have a great impact in five years,’ said Alan Gray, FD of the Leprosy Mission.
Among the more confident was Tony Taylor, FD of the Yorkshire Building Society. ‘We have no ACT worries because, as a mutual building society, we don’t need to distribute dividends to shareholders, but instead let all members profit through beneficial interest rates,’ he said.
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