Corporate tax reform consultation extended

Link: Door slammed on tax avoidance loopholes

The new documents follow on from a consultation first launched in August 2002 which was widely derided for not being far reaching enough.

Paymaster general Dawn Primarolo said in the new proposal paper that ‘further steps are needed if we are to ensure that the corporation tax regime meets the challenges of the modern business environment, does not impeded the drive to greater efficiency, productivity and growth and keeps pace with European and international developments.’

The further consultation has been long predicted by Treasury observers who has originally expected the government to rake on much more fundamental reform of the tax system when the review was launched last year.

The government is looking for views on proposed changes to the tax treatment of capital assets, changes to the treatment of trading and investment companies and the rationalisation of the schedular system to allow more offsetting of losses.

In today’s paper the government cites the onset of international accounting standards in 2005 as a major reason for undertaking the review.

The government is clearly concerned about the impact of the standards on taxable and accounting profits.

Notice is also given by the government that changes to tax law may follow if accounts prepared under international standards fail to give the right result for tax purposes.

Comments should reach the government by no later than 3 November 2003.

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