Pre-Budget statement: Concerns grow for deferral relief

In his pre-Budget report Gordon Brown announced that the long running consultation on deferral relief – a tax break on the profits made by companies selling shareholdings in another business – would continue with the publication of a new technical note.

But concerns remain and experts believe that the measure will only encourage parent companies to prepare subisidiaries for a share sell off – principly through hard cost cutting that would involve redundancies.

Calls are now growing for a comparable relief for internal growth within a company to offset the risks poses by deferral relief.

If this is not done experts say companies could prefer to look for growth through acquisition, rationalisation and a quick sale.

Chas Roy-Chowhury, head of taxation at the ACCA, said: ‘There has to be concern when the relief is being offered on an acquisitions basis.’

More responses are being sought to the new technical with a closing date of 20 December this year.

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