Reduction in Corporation Tax Announced
The Government’s objective for the UK to be the most competitive tax regime in the G20 has been strongly boosted by a key announcement in yesterday’s budget. Chancellor, George Osborne confirmed in the 2013 budget that from 1 April 2015 all companies in the UK will only have the one rate of Corporation Tax, which at 20% will be aligned with the basic rate of Income Tax.
George Osborne referred to the possibility of a future decrease in corporation tax in his 2012 budget, albeit without the mention of any timings, so this announcement was not entirely unexpected. However, this news is a much needed dose of positivity for the UK, currently riding the waves of economic uncertainty.
Benefits of a Simplified Tax Regime
The implications for UK businesses of a simplified tax regime will be hugely beneficial. A point of significant note for companies to consider will be whether to defer their profits to future years and to subsequently take advantage of the reduced tax rate. It is also hoped that in the future UK businesses may also benefit from simplified rules on Corporation Tax payments if the Government also chooses to undertake this in light of the simplified tax regime.
Additional Budget Measures for Businesses
In addition to the reduction in Corporation Tax, other announcements were made which were all intended to help the Government to reach its ultimate goal of operating a highly competitive tax regime. By 2015, the Government is aiming to entice overseas investors to the UK and attract back any companies which have left the country in recent years in search of more prosperous shores. However in light of the announcement of the revised tax regime, the hope is that many businesses will return before this time.
Focus on Tackling Tax Avoidance and Evasion
Tackling Tax Avoidance
This year’s Budget saw the Chancellor make a host of announcements regarding the widely publicised topics of tax evasion and avoidance.
George Osborne highlighted the renewed and significantly heightened commitment by the HMRC to plan to dramatically decrease the levels of offshore tax evasion by bringing in £3bn in unpaid taxes. These plans are detailed in the HMRC’s ‘No Safe Haven’s’ documentation, which provides a framework for the HMRC’s strategy to clamp down on tax evasion.
The HMRC confirmed that its process of partnering with other jurisdictions in order to track down tax evaders has helped them to make considerable progress in tackling tax evasion.
Naming and Shaming Offshore Promoters
In addition to the new strategic approach outlined by the HMRC, this summer will see the Government consult on plans to introduce a radical scheme to potentially name and shame the promoters of offshore tax evasion operations.
However, Baker Tilly, one of the UK’s leading accountancy and advisory firms, questions whether these measures will actually act as the intended deterrent or will they in turn provide promoters with a free advertising platform. Additional publicity for promoters could actually entice taxpayers who either wish to continue in tax avoidance or even attract a new catchment of risk takers.
For more information regarding Corporation Tax and in depth analysis of the 2013 Budget, please visit the Baker Tilly website or follow #BakerTilly13
