PracticeAccounting FirmsTax windfall for firms

Tax windfall for firms

Accountancy firms and other services companies have come out as the clear winners in the government's eco tax after receiving millions of pounds in national insurance rebates.

Link: Business bosses slam ‘inept’ eco tax

and Climate change levy slammed as stealth tax

According to a survey from the Confederation of British Industry and the Engineering Employers Federation, the service sector has seen more than £60m slashed from its NIC bills.

Following the introduction of the climate change levy professional service firms have benefited through lower costs and increased fees as they have advised clients on coping with the new levy.

The levy itself cost service firms £356m, but they received an NIC cut of £418m.However, the manufacturing sector has borne the brunt of the levy with a net increase of £143m in costs.

The report, an assessment of the first year of the levy, argued that UK companies, both in manufacturing and the service industries, were becoming less competitive with their counterparts abroad because of the impact of the levy.

But while more than half of the manufacturing companies reported a worsening competitive environment, only 28% of service companies said that they had suffered as a result of the new charge.

‘The bitter irony is that all this pain is not actually delivering the intended energy improvements,’ said Martin Temple, director general of the EEF.

The survey found that while some companies in the service sector, such as supermarket chains, were worse off, others, such as government departments and professional services firms, including lawyers and accountants, were better off.

A spokesman for the CBI said the government had intended the climate change levy to be ‘revenue neutral’, but that has not proved to be the case.

Accountancy firms defended their position, claiming they had implemented both behavioural and structural changes to reduce energy consumption.

KPMG, which had an energy bill of £1.6m last year, does not pay the CCL as it buys 90% of its energy from renewable sources.

Mike Kelly, head of corporate responsibility at the firm, said: ‘As part of the p&l account, it’s only a small percentage so it might not get senior management attention, but here there is senior management attention – it’s not rocket science.’

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