Tax authorities raise private equity fears

Tax authorities raise private equity fears

Officials claim the rapid growth of the private equity industry is placing tax revenues at risk

Tax authorities around the world have expressed their concern about the
growth of private equity, claiming that the mass shift in private ownership will
undermine efforts to persuade large businesses to be open about their tax
affairs.

At a meeting held in Seoul top revenue officials noted ‘the increased flows
of capital into private equity funds, and the potential issues this may raise
for revenue bodies’, the FT reports. The officials were concerned that
private equity was less likely to be transparent about their tax affairs than
listed companies

The concerns raised at the international meeting compound long-standing
worries of the UK taxman that the growth of private equity may damage tax
revenues, because they typically used high levels of leverage and offset
interest rate costs against tax.

At the meeting the officials also targeted advisers, and commissioned HM
Revenue & Customs to examine the role of lawyers and accountants in
non-compliance and unacceptable tax planning.

HMRC will consider the benefits of a registration system for tax advisers
working on tax returns, penalties for advisers who promote abusive schemes, and
the requirement to make an early warning to authorities about any new tax
avoidance schemes.

Loughlin Hickey, global head of tax at KPMG, said authorities would be better
off focusing their attention on reducing red tape, which would stop the advance
of private equity.

Hickey also criticised officials mixing up non-compliance with tax
minimisation, which damaged the relationship between advisers and tax
authorities.

Share

Subscribe to get your daily business insights

Resources & Whitepapers

Why Professional Services Firms Should Ditch Folders and Embrace Metadata
Professional Services

Why Professional Services Firms Should Ditch Folders and Embrace Metadata

3y

Why Professional Services Firms Should Ditch Folde...

In the past decade, the professional services industry has transformed significantly. Digital disruptions, increased competition, and changing market ...

View resource
2 Vital keys to Remaining Competitive for Professional Services Firms

2 Vital keys to Remaining Competitive for Professional Services Firms

3y

2 Vital keys to Remaining Competitive for Professi...

In recent months, professional services firms are facing more pressure than ever to deliver value to clients. Often, clients look at the firms own inf...

View resource
Turn Accounts Payable into a value-engine
Accounting Firms

Turn Accounts Payable into a value-engine

3y

Turn Accounts Payable into a value-engine

In a world of instant results and automated workloads, the potential for AP to drive insights and transform results is enormous. But, if you’re still ...

View resource
Digital Links: A guide to MTD in 2021
Making Tax Digital

Digital Links: A guide to MTD in 2021

3y

Digital Links: A guide to MTD in 2021

The first phase of Making Tax Digital (MTD) saw the requirement for the digital submission of the VAT Return using compliant software. That’s now behi...

View resource