In the last two days the Treasury has announced its intention to implement a number of the key proposals in the Business Taxation chapters of the report by Lord Forsyth’s Tax Reform Commission, including:
- ending the system whereby profits repatriated from overseas companies back to the UK are taxed
- abolishing Treasury Consent (the last remainder of pre 1979 exchange controls)
- establishing an Advance Clearance system to confirm upfront the tax treatment of major transactions
- relaxing the anti-tax haven rules
The changes are all aimed at simplifying the tax regime and making the UK more business and inbound investment friendly. The feared loss of interest relief for loans to buy overseas subsidiaries has only materialised in a very limited form, unlikely to affect most business. Overall these measures are a big improvement on the current UK tax system.
Despite the TRC being established by George Osborne, its recommendations have not yet been adopted as party policy which has made it easier for Gordon Brown to steal a march on him and claim them as his own (one of the many patented New Labour traits that Brown doesn’t look like shaking off anytime soon).