CGT proposal backlash

CGT proposal backlash

CIoT and English ICA attack government over its corporate tax consultation.

The Chartered Institute of Taxation and the English ICA’s tax faculty have slammed the government consultation process over capital gains tax for individuals.

In response to consultation papers concerning corporate CGT, both bodies have drawn attention to the government’s lack of discussion over private CGT, and have identified potential problems when combining the two.

The tax faculty was disappointed that the chancellor announced a completely new system without consultation. It called for more discussion.

The faculty also criticised the Inland Revenue for running two CGT systems, one for individuals and one for companies using indexation relief. The faculty’s submission says: ‘We stated that two systems for taxing gains is a needless complication.’

It adds that the current system of giving relief for inflation by way of indexation should be retained.

Frank Haskew, a tax manager at the faculty, said: ‘It is very complicated.

We would have preferred one system that could have applied to all.’

The CIoT said it was disappointed that effective consultation did not take place in relation to the chargeable gains of individuals. It added: ‘We would hope that, in relation to companies, the Revenue would feel able to expose a package of proposed detailed measures for comment.’

Nigel Eastaway, head of the technical committee at the CIoT, commented: ‘The Revenue’s consultation was almost impossible to respond to – it went straight to the finance bill and that was it.’

John Whiting, a tax partner at PricewaterhouseCoopers, said he would question whether it is necessary to have corporate CGT at all.

He said: ‘Except for investment companies, you question whether it is necessary. For insurance companies, it could be a nightmare.’

Whiting suggested that the Revenue could be seeking to increase companies’ tax contributions. He said: ‘Although the overt aim is to encourage entrepreneurs, it will try to raise more money.’

A Revenue spokeswoman said it was too early to assess any responses.

No date has been set for a statement from the Revenue on the matter. ‘Only when submissions have been reviewed will we have an answer,’ she said.

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