TaxCorporate TaxControlled foreign companies talks kick off

Controlled foreign companies talks kick off

Government unveils latest attempt to keep multinationals in the UK, while ensuring the way company funds are used in low tax jurisdictions does not erode the UK's tax base

The coalition government has kicked off a raft of consultations in efforts to
hammer out solutions to some of the UK’s most contentious tax issues.

The way UK-based multinationals use income in low-tax jurisdictions has been
a major sticking point for several years and the new government has made good on
its promise to address the situation by starting an informal consultation about
controlled foreign companies.

HM Revenue & Customs is jointly handling the consultation with the
Treasury.

Senior figures from Anglo American, British American Tobacco, Xerox, IBM,
Intercontinental Hotel Group, Rolls-Royce and Aviva have been drafted into a
working group operating alongside the consultation.

However, a warning was also issued by the government that any proposed
changes would not short-change the UK’s tax coffers by eroding the tax base.

HMRC and the Treasury also opened a discussion document which proposed moving
to a “territorial” treatment of foreign company taxation rather than basing it
on ownership.

A working group including representatives from BG group, BP, HSBC Sony and
Standard Chartered has been set up to discuss options and proposals in more
detail.

In total, the Exchequer Secretary to the Treasury David Gauke MP published
nine documents for discussion and consultation relating to tax, following
commitments made in the June Budget.

In addition to the foreign branch taxation discussion and informal
consultations on CFC interim improvements, issues being discussed include PAYE
reform, furnished holiday lettings, pensions tax relief, associated company
rules, disclosure of inheritance tax avoidance and modernisation of investment
trust company rules.

Gauke said: “We want to make the tax system simpler and work better for the
taxpayer.

“By reducing burdens, making the right choices and involving taxpayers, we
are
sending a very clear signal that Britain is open for business.”

“I want to encourage relevant parties to provide their feedback
on the tax consultations that we have published today.”

Further reading:

Vodafone
settles marathon case with taxman for £1.25bn

Battlelines
drawn in CFC conflict

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