TaxCorporate TaxRushed legislation will lead to mistakes

Rushed legislation will lead to mistakes

The Inland Revenue's approach to changes in the way goods are taxed when exchanged between group subsidiaries has prompted outrage among both accountants and UK plc.

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.

Related Articles

Big names, little tax: Airbnb, Facebook, Kellogg’s, eBay

Corporate Tax Big names, little tax: Airbnb, Facebook, Kellogg’s, eBay

2m Alia Shoaib, Reporter
New trading allowance: simplicity, but not as we know it

Administration New trading allowance: simplicity, but not as we know it

2m Emma Rawson, ATT Technical Officer
EU divided over radical tax reforms targeting tech giants

Corporate Tax EU divided over radical tax reforms targeting tech giants

2m Alia Shoaib, Reporter
‘Improve rather than lose’ disincorporation relief, tax body urges

Administration ‘Improve rather than lose’ disincorporation relief, tax body urges

3m Austin Clark, Reporter
How to educate your clients about tax avoidance

Corporate Tax How to educate your clients about tax avoidance

3m Clear Books | Sponsored
CGT clampdown nets HMRC £124m – but could lead to increase in use of avoidance schemes

Corporate Tax CGT clampdown nets HMRC £124m – but could lead to increase in use of avoidance schemes

3m Austin Clark, Reporter
‘Google tax’ nets HMRC £281m

Corporate Tax ‘Google tax’ nets HMRC £281m

3m Emma Smith, Managing Editor
Should I incorporate my buy-to-let business?

Corporate Tax Should I incorporate my buy-to-let business?

4m Emma Rawson