Intellectual bullets fired in tax war

Intellectual bullets fired in tax war

The UK’s escalating battle over tax is set to escalate with the advent of a new weapon

The Oxford University Centre for Business Taxation has revealed its research
agenda and appears set to give UK corporates the intellectual ammunition they
need to tell the government that its crackdown on tax avoidance is unjustified.

Corporates, the centre’s head Prof Michael Devereaux and main funders the
Hundred Group of FDs will all disagree with that description and no doubt accuse
this column of pre judging the research conclusions before they’ve been reached.
But there is a danger that the centre’s work will be viewed in this way.

Take one line of inquiry, which will be to examine whether there are any
economic benefits from the government’s crackdown on avoidance, or could be it
much better targeted. The reason being that the general crackdown takes money
from corporates into the exchequer while say, targetting transfer pricing might
bring money into the UK which would otherwise remain abroad.

No doubt Treasury officials could take a quick glance at that project and
make an educated guess at where it will all end. Likewise, when they examine
another investigation into whether corporate tax in itself has harmful effects.

But while the centre’s work might just provide a freshly stocked armoury for
FTSE 100 FDs, it will have to tread a carefully. A hasty call to more closely
manage transfer pricing could offend many a UK multinational with healthy
revenues overseas. That gives the academics, funded by business, a tightrope to
walk.

Being caught between the wrath of the exchequer and your own benefactors
might not be a comfortable place.

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