THE CHANCELLOR gave me a pleasant surprise yesterday with the announcement that the main rate of corporation tax would be reduced to 21% from April 2014.
It has long been known that it is his policy objective to reduce the main rate and to unite it with the small companies’ rate at 20% so the reduction is not a surprise from that perspective. What is surprising is the commitment shown to that policy against the current economic backdrop.
Over recent times, accusations of multi-national tax avoidance have grabbed headlines. However, there is another story unfolding in the background which is arguably much more significant, although it does not necessarily get into the press.
Five years ago, when I first started proposing the UK as a holding company jurisdiction, it was difficult to be taken seriously. These days there are a number of multi-national companies that are looking to do precisely that. More and more often, I have conversations with my clients about locating some or all of their holding and trading activities in the UK.
Some say that there is an indirect correlation between inward investment and corporation tax rate. What is absolutely clear is that a commitment to a low corporation tax rate sends a signal overseas stating that the UK is open for business. Well done to Mr Osborne. Only 1% to go.
Kevin Hindley is a managing director at Alvarez & Marsal Taxand.
Lord Howard Leigh of Hurley discusses the government’s initiatives to mitigate tax avoidance and evasion
Top 50+50: Demand for tax advisory services remains high, but fee pressure is expected in relation to compliance services
The demand for tax advisory services remains high and this looks to continue; but fee pressure is expected in relation to compliance services as the “Making Tax Digital” initiative is rolled out,
While some resistance to change is to be expected, the degree of controversy surrounding HMRC's Making Tax Digital proposals has surprised the government
Kevin Reed discusses the worrying findings from HMRC on micro-businesses' problems handling Real-Time Information, and the latest thoughts on how accountants can provide value-added services