UK plc could be left ‘hamstrung’ if corporation tax regime isn’t changed
BUSINESS leaders say they fear that the rate of corporation tax will stay the same or even increase after the next general election despite calls for a cut.
A survey by business and financial advisers Grant Thornton shows that 84% of finance directors believe that UK plc will be left ‘hamstrung’.
Around two thirds have backed the business advisory firm’s tax manifesto call for the rate to be cut to 25% or under to boost UK competitiveness.
A total of 500 finance directors were polled to gauge what the business community thinks the next Chancellor will do and what important measures he or she should introduce.
Nearly a third said they believed that corporation tax would increase to between 29 and 30% while a further 20% felt that it will rise to more than 30%.
Only 34% believe it will remain at the current rate of 28% after the next general election to deal with the mounting fiscal deficit.
Jonathan Riley, managing partner at Grant Thornton’s Leeds office, said the survey’s results were a call for help from the business community.
“The UK requires a more competitive tax system for large corporate organisations to ensure that the country remains an attractive location where multinational businesses want to be headquartered,” he said.
“The marching exodus of well known brand names form the UK to more attractive tax locations in Europe is damaging to future growth and confidence.”
More than 70% of finance directors questioned said they felt the UK will become a less attractive place for top talent from overseas to settle after the introduction of the new top rate of income tax.
Just over half said that the new rate of income tax will have a detrimental effect on financial services and other high earning industries in the UK.
Grant Thornton’s tax manifesto proposes cutting corporation tax to 25% and relaxing the controlled foreign company rules, which currently prevent the UK from competing on equal terms with other countries.
It proposes the creation of a tax policy committee where tax policies would be formulates by a parliamentary tax committee and moved away from the ad hoc manner in which current fiscal policy is formulated.
The committee would be made up of tax experts, business advisers and would tap into the experience of the House of Lords Economic Affairs Committee.
Mr Riley said: “Our proposal, which has the support of the business community, is to have a more informed discussion by expert advisers on fiscal policy rather than knee jerk reactions leading to Finance Bills being rushed through Parliament.
“This only proves difficult for businesses and individuals to forward plan and anticipate how tax changes will effect them.”
