The CIOT and Business Tax Measures

CIOT response to business tax measures in the Budget.
Contacts: John Whiting: 020 7804 4422 (office); 07710 027 595 (mobile)

Press Office: Viv Rees: 020 7245 4109 (office); 07900 220887 (mobile)

The CIOT notes that there are considerable extra burdens on business in this Budget, which far outweigh the beneficial measures such as R&D tax relief, substantial shareholdings and the cuts in corporation tax for small companies.

John Whiting, CIOT President, said:

“If it is necessary to increase the extra NIC burden on employers, there should at the very least have been a modicum of compensation by a real commitment to simplify the administrative burdens on employers.”

Some of the CIOT’s comments are:

• It is surprising that there was no separate Budget notice for the withdrawal of the special tax relief scheme for the making of TV films. Instead of tax relief at the time of production, it will be spread over the lifetime of the film which in international market could be several years. Whilst raising £225m in 2003/2004, it could deter TV film makers and adversely affect the quality of TV viewing.

  · We were very disappointed that the new 10% supplementary tax on North Sea oil changes to capital allowances and abolition of royalty have been introduced with no consultation. There is no good reason for not involving the industry in such decisions.

  · We welcome the exemption of goodwill from stamp duty and the commitment to the overdue modernisation of this archaic duty, for which we have long argued.

  · We need clarification of what is meant by the reserve power of HM Treasury to exclude from CFC exemptions companies which choose to carry on business in designated jurisdictions. Given the importance of a balanced CFC regime to international growth, any amendment of the type proposed should be subject to full Parliamentary scrutiny rather than Treasury regulation with the “express consent of Parliament”.

  · We need clarification of what is meant by the Government’s option to alter the calculation of profits and incidence of taxation for branch tax (based on OECD guidelines) when deciding whether to set up in the UK. Multinational companies, in particular banks, should be entitled to rely on changes in taxation only by statute rather than at the option of the Government.

  The CIOT looks forward to participating in discussions and will submit observations as the measures take effect.

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