CUTS to the headline rate of corporation tax are a welcome step towards making the UK competitive again, accountants UHY Hacker Young said today, but warned the crackdown on tax avoidance may undo the good work of the rate cuts.
The headline rate is being cut each year and will fall to 21 per cent in 2014. But of the more-than 20 big name firms to have left the UK for tax reasons since 2007, only three – advertising firm WPP, business publisher UBM and asset manager Henderson – have announced plans to return.
“The UK government has made efforts to improve the attractiveness of the UK tax regime as a whole, but there is still some way to go,” said UHY’s Roy Maugham. “The UK’s taxes on non-UK profits or on dividend payments between different parts of multinational corporations have all been mentioned by businesses in the past as reasons to leave the UK and base themselves in countries with lower taxes.”
And he said the planned General Anti-Abuse Rule (GAAR), which clamps down on tax avoidance, may also dissuade firms from coming to Britain.
“The GAAR could be very wide-ranging and open to a range of interpretations,” he said.