Baker Tilly chief warns Budget may carry ‘pain cost’ for businesses bracing tax changes
The chief executive of professional services giant Baker Tilly International has warned the upcoming Budget will likely carry a heavy “pain cost” for UK businesses bracing for tax changes.
“It’s going to be a ride, isn’t it,” Francesca Lagerberg, Baker Tilly International‘s chief executive told City AM. “The mood music is that it won’t be a fun day out, I think that is probably where everybody is sitting at the moment.”
Rumoured tax changes for businesses in the upcoming Budget, which is scheduled for 28 October, include business rates reform, sector-specific levies, and reductions to the tax gap.
Lagerberg said there were “plenty of businesses who would say that their business would be massively hampered by tax changes.”
“Fundamentally, you come back to the fact there are some big ticket things that probably need to change to enable us to do the things which everybody would like to have happen, but they all come with a pain cost,” she said.
According to the firm’s annual mid market survey earlier this year, UK businesses are already considering relocating abroad for a more stable tax and regulatory landscape.
The survey found that out of all nine markets and 1,500 business leaders surveyed, including in the US, China, and India, UK firms were “most likely” to move operations to markets with “more predictable tax and regulatory environments.”
This comes after emerged on Tuesday that Chancellor John Healey has missed key targets on government borrowing ahead of his maiden Budget after the UK borrowed more than economists forecast in August.
The Office for National Statistics (ONS) said borrowing in August was £18.3bn, which was approximately £3.5bn above a prediction by the Office for Budget Responsibility and surpassed market predictions.
“They [the government] are going to have to make some very tough decisions, but it’s going to be an important one obviously for this particular government because it sets up their new set place for where they are going to go with their new approach,” she said.
Lagerberg added that in previous years before the Budget, she has seen businesses put the brakes on activity for up to six months while waiting for policy clarity, particularly around tax changes.
“Everybody hates uncertainty, and you do have people who just stop doing stuff and wait until they know what the rules are going to be, and that’s never very good for business. These big, grandstanding events are very rarely good for business because you have this lead up to it where everyone’s panicking”, she said.
“As has always been the case, decisions on tax are a matter for the chancellor to set out at fiscal events, rather than routinely commenting on rumour, speculation or proposals,” a Treasury spokesperson told City AM.