Foreign profits consultation grinds to halt

The consultation on radical reforms of the way the UK taxes foreign profits
has ground to a halt as advisers worry that the moves could cost multi-nationals
money, despite Treasury assurances.

‘There was no mention of foreign profits in the pre-Budget report and we are
waiting for more concrete proposals. The discussion is hanging in the air,’ said
Heather Self at Grant Thornton.

The reforms are the biggest shake-up of multi-national corporate tax of
recent years, with plans to stop taxing inbound dividends and changes to
interest relief and controlled foreign company rules on the agenda.

The Treasury has maintained that the package of reforms will be revenue
neutral, but advisers are adamant that a detailed breakdown is essential to back
up this claim.

‘Whether or not it is revenue neutral overall may depend to some extent on
the assumptions which have been made,’ PricewaterhouseCoopers said in a briefing
note. ‘Overall, it would be premature to seek to move from the discussion phase
to a consultation phase on the basis of the material so far.’

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