Autumn Statement 2012
This year’s Autumn Statement, as widely trailed in the press, included a mini-Budget. Mr Osborne advised that he was seeking ‘savings from the better off’ and offering ‘new support for business and enterprise’. The announcements were intended to achieve a combination of spending and tax changes that are fiscally neutral.
The savings from the better off largely comprised his estimate of the receipts from the UK/Swiss Repatriation Agreement, and yet another change to pension savings, reducing both the annual contribution cap and the lifetime fund cap. Most of the other changes were cleverly announced but of limited impact to most readers of this report.
The tax-related business measures continue the recent trend to present the UK as a compelling tax regime for international companies to locate operations that will generate employment and other tax receipts. This job can never be completed, as the UK will need to continue to set the pace on headline corporation tax rates, taxation of foreign profits, and the cost and ease of complying with legislation.
The Chancellor continues to refine his definitions of illegal evasion, legal tax avoidance and aggressive tax planning – and categorises all three areas increasingly similarly. Whilst he must be frustrated that companies continue to consider various forms of tax planning, the overwhelming majority of legitimate planning arises from the quality and quantity of the Government’s tax legislation, and the resourcing and direction provided to HMRC by the Government.
The planned new HMRC resources and powers to tackle anti-avoidance and create a level playing field will be seen as offensive by very few. The way in which they are implemented and interpreted, and any additional uncertainty that they create in the business community needs to be kept under ongoing review to ensure that differing perceptions of tax avoidance and the number and nature of investigations undertaken, do not collectively threaten to suffocate the ‘golden goose’.
I look forward to providing further commentary following the release of much of the draft Finance Bill 2013 on 11 December for final consultation, and in the meantime hope you find our report helpful.
Please contact me or your usual BDO adviser if you would like to discuss how the announcements might impact you or your business.