TaxCorporate TaxPBR 07: PwC disappointed with foreign profits tax

PBR 07: PwC disappointed with foreign profits tax

Darling's cherrypicking PBR given a lukewarm reception by Big Four leader

PricewaterhouseCoopers has delivered a mixed reaction to Alistair Darling’s
pre-Budget report.

The firm was especially disappointed that taxation of companies’ foreign
profits had not been addressed.

Discussions began in June this year, with scores of businesses, including
PwC, formally responding in mid-September.

Peter Cussons, tax partner at PwC, said: ‘The absence of any announcement on
the subject by the government today leaves international businesses in the UK
unsure as to the government’s intentions. We believe that the current
cross-border taxation regime is unnecessarily complex, and could be considered
anti-competitive compared with other countries’ tax regimes.’

The capital gains clampdown would herald significant change for a wide range
of commerce, especially private equity and property companies.

Kevin Nicholson, tax partner and UK head of entrepreneurs and private
companies, said: ‘This will be a bitter pill for those that had built up their
business with the expectation of selling out with only a 10% tax charge.
Conversely those who held non-business assets such as many properties will see
their tax rate fall from 24% to 18%. Similarly tax payers who would have faced
the highest 40% tax charge on assets like buy-to-let portfolios and quoted share
portfolios will be pleased by these new measures.’

Darling’s shift on IHT was welcomed by the Big Four firm. The chancellor
raised the inheritance tax threshold to £600,000 and also announced a shift in
IHT legislation which will pave the way for people to transfer any unused IHT
nil-rate band allowance on a person’s death to the estate of the surviving
spouse or civil partner.

Clive Mackintosh tax partner and head of private clients said: ‘This will
reduce the need for complex wills and reduce inheritance tax on many family
homes.’

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