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CIOT slams consultation process

21 May 2008
Categories: News , Companies
'Rabbit-out-of-hat' policies blamed for doubt over future of multinationals

The Chartered Institute of Taxation has singled out the Government's consultation process as a major cause of doubts over whether UK-based multinationals will remain in the country.

Such concerns, said the CIOT, have been sparked by a climate of uncertainty caused by inadequate pre-consultation on changes that have been made in successive Budgets and Pre-Budget Reports. This has meant that international business structures have to be regularly rearranged to deal with the latest changes.

The institute posited the belief that protecting the UK tax base could be achieved most effectively via more targeted measures, rather than the 'controlled companies' regime envisaged by foreign profits proposals, which would be very compliance-heavy because of their requirement for detailed annual calculations in respect of many  overseas subsidiaries of a UK headed group or subgroup.

The chairman of the CIOT's technical committee, Ian Menzies-Conacher, stressed the importance of consultation as the key to producing tax law that achieves ministers' objectives.

'It is far better to use the various consultation mechanisms available — informal, formal and responses to consultation documents — than to produce a rabbit-from-a-hat [policy],' he said.  

'The latter almost inevitably leads to unintended consequences, and it is much better to take the time necessary to get it right. The whole point of a consultative approach is to listen to what is said, reflect on it and consider proposed changes.  

'Where a consultative approach has been employed from the start, the CIOT does not think that it is accurate or helpful to describe this process in terms of U-turns or climb-downs.'

Sections - corporation tax

Categories: News , Companies
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