#1bn savings on PRP dismissed as 'absurd'

Estimates that the Treasury could save as much as z1bn by restricting Income Tax relief on PRP schemes to the basic rate, have been dismissed as ‘absurd’ by Chantrey Vellacott.

The firm, which has conducted its own analysis of the figures, claims the saving from capping PRP to the basic rate of income tax was grossly exaggerated in national newspapers last week. Chantrey Vellacott puts the figure more realistically at less than z100m.

Maurice Fitzpatrick, senior tax consultant at Chantrey Vellacott, questioned the logic of the Chancellor opting to alienate around 250,000 high-earning voters in existing PRP schemes, in an attempt to reclaim only z100m during an election year.

The Treasury dismissed as ‘speculation’ suggestions that it was considering limiting PRP schemes to the basic rate of tax. A Treasury spokesman said that z1bn was the total estimated cost of operating the PRP scheme for 1995-96 without savings being made.