Other than Brexit related tax changes, it would be surprising for the Conservative government to introduce radical tax changes now but what happens beyond Brexit remains to be seen. The partners of national audit, tax, advisory and risk firm Crowe react to the main proposals set to inform the tax agenda for the coming months.
Ongoing measures to tackle tax avoidance and evasion will include increasing the maximum term for tax fraud to 14 years, strengthening HMRC’s Anti-Tax Evasion Unit and consolidating existing anti-evasion and avoidance measures and powers.
The Conservatives have also confirmed their intention to implement the Digital Services Tax to increase the tax take from major multinational companies.
Laurence Field, Corporate Tax Partner comments:
"Clearly the digitalisation of business has left a mismatch in terms of how an antiquated tax system copes with modern business practices. Digital services taxation is politically attractive even if this causes conflicts with other jurisdictions.
However, with the Conservative election built around ‘getting Brexit done’, this area has become more complex due to the potential shape of any UK-US trade agreement. Given that many of the tech giants that would be impacted by a digital services tax are US companies, there may yet be tension to come between the intention to implement a DST and the need to find a suitable deal with a key international trade partner. All eyes will be trained on February’s Budget announcements, which will come shortly after the UK’s schedule EU departure date.”
While the Prime Minister has decided not to proceed with the planned reduction of corporation tax, he has made no explicit comment on keeping the rate at 19% meaning there could be future increases on the horizon.
Johnathan Dudley, Head of Manufacturing comments:
"Maintaining corporation tax rates at 19% in the medium term will help manufacturing businesses to plan in these uncertain times. The manifesto related proposal to increase the Structures and Buildings Allowance from 2% to 3% will provide welcome additional tax relief for businesses that invest in manufacturing sites.
The government could give a further welcome boost by providing other tax incentives to manufacturing businesses and exporters. Enhanced tax reliefs or incentives for businesses investing in plant and machinery particularly in robotic or additive engineering capabilities to replace existing reductive engineering technologies would help drive innovation in UK manufacturing. It would be great to see a tax incentive for SMEs to encourage them to start or increase their export activity.”
The Conservatives have pledged to ‘review and reform’ Entrepreneur’s Relief (ER) from Capital Gains Tax (CGT) after acknowledging that some measures have fallen short in terms of encouraging business investment.
Rebecca Durrant, Head of Private Clients comments:
"The Conservatives have implied that ER hasn’t fully delivered on its objectives and so a review of the relief in its current guise looks likely. There has been quite a lot said about the originally projected cost of ER compared to its higher current cost. Entrepreneurs with a disposal in the offing may be keen to transact sooner rather than later.”
Stacy Eden, Head of Property and Construction comments:
“Feedback from Crowe’s latest Property and Construction Survey continues to show that simplification of the stamp duty land tax regime and reduction of the compliance burden facing the property sector are the two priority areas where change would be welcome. While increasing property tax allowances and relief for business rates will help, we will look forward to further reforms to achieve the simplification the sector needs.”