Experts warn of backdoor rises in corporate tax

Tax rises may be sneaked in through the reform of the UK’s corporate tax regime because the government has made no assurances that it will be revenue neutral, experts have warned.

Link: Corporation tax must be simplified

With less than a week until Gordon Brown’s Budget, PricewaterhouseCoopers is just one group to raise concerns over potential tax rises.

‘It would be very helpful to have a clear indication from the Inland Revenue as to the expected impact of these reforms on the corporation tax revenues -ð they are not obviously revenue neutral and may in fact be revenue raising,’ said PwC in its response to a consultation which closed on Friday.

John Whiting, tax partner at PwC, said the Revenue may take away some obscure tax relief to simplify corporation tax but then fail to give back what it has taken away.

The ICAEW tax faculty has also expressed concerns over the process. It said it was ‘disappointed that so little progress has been made despite two and a half years of consultation’.

The ICAEW flagged up the spate of recent European Court of Justice cases as a probable requirement for change that has not been addressed.

‘This is a programme of principled reform, reflecting the government’s aims of competitiveness and fairness in the corporation tax system. It is not driven by considerations of revenue-raising,’ said an Inland Revenue spokesman.

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