Experts from both sectors say there is not enough time to implement the changes, which come into force from 1 April this year. Consultation on the issue closed only last week, after running for just eight-and-a-half weeks.
‘The tight timescale for consultation has not allowed tax specialists adequate time to consider the wider implications,’ said Ian Dewar, convenor of the ICAS tax committee.
The problems inherent in solving transfer pricing issues were highlighted in the recent results of FTSE100 pharmaceutical firm AstraZeneca.
For complex legislation such as transfer pricing, the likelihood of mistakes being made increase. Jonathan Symonds, chief financial officer at AstraZeneca, said: ‘We spend a huge amount of time and energy on transfer pricing.
It’s quite a sophisticated process, certainly for pharmaceutical companies.
It’s probably the issue we spend most time on.’
The accounts noted that the company had at last come to a settlement with the Revenue and US government over products sold in the years 1987 to 2001.
ICAS is lobbying the government to delay the introduction of the legislation, although the likelihood of this remains very slim.
Research conducted by PricewaterhouseCoopers found that out of 82 clients surveyed, 69% classed the 1 April implementation date as either ‘completely unrealistic’ or ‘unrealistic’. Up to 92% said they needed six months to prepare for the regulations.
ACCA has also mounted an attack, outlining its disapproval of the 1 April date. ‘If the new rules are brought in from April 2004 the implementation date will be a serious problem.’
While most involved in the debate feel the government has little option but to change legislation, and most also feel that Gordon Brown has tried to limit the financial implications, the timing remains a serious obstacle.
‘When legislation has been rushed through first time, it has inevitably not been right,’ said Chas Roy-Chowdhury, head of tax at ACCA.
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