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Election timetable dictating fundamental taxation changes

It seems that accountants specialising in tax services are going to have their work cut out over the next year or two if several developments on the political front all start to converge at once. There is mounting pressure to reform a number of aspects of the current tax system and this could lead to some root and branch changes that will have individuals and businesses reaching for the phone to consult their advisers. The prospect of the General Election in eighteen months’ time will only add to the urgency to bring forward any changes.

Corporation Tax is one area that is almost certain to witness some much overdue reform. At the moment it is far too easy for multinational companies to avoid vast chunks of tax on their UK profits by trading with subsidiaries in other countries or in offshore tax havens with lower or even non-existent corporation tax. This is a hugely important issue for the government because it looks as though Big Business is once again putting one over on Joe Public who is doing his bit for the austerity programme without any chance of avoiding his share of tax.

David Cameron and his colleagues have already brought in new measures to clamp down on the use of tax havens and the extreme “confidentiality” that they have offered in the past. However, many would argue that this is part of a mere sticking plaster approach to the problem and that the whole system of corporate taxation needs to be re-examined.

A similar situation exists with Business Rates which are increasingly becoming a source of aggravation for businesses who would, by and large, be normally relied upon to support the Conservatives. High Street retailers are getting particularly upset by seemingly automatic annual increases in rates which tend to penalise owners of physical retail premises while their online counterparts pay little or nothing.

There is a likelihood that the rates system will either be fundamentally reformed or scrapped altogether with a replacement possibly taking the form of a local sales tax or similar.

On top of all this, businesses operating in Wales may also have to deal with additional taxes specific to the principality following the government’s decision to allow the Welsh Government to raise its own taxation to pay for certain items such as major motorway improvements.

The vast majority of professionals involved in providing tax services will no doubt be hoping that the election in May 2015 does not result in an overall Labour majority as this will doubtless precipitate an avalanche of additional tax legislation. Leopards don’t change their spots and, if installed as Chancellor, Ed Balls can be expected to carry on where Gordon Brown left off. The 2012-2013 edition of Tolley’s tax guide is now a whopping 16,220 pages long, having doubled in size between 1997 and 2011. Mr.Balls will no doubt be aiming to breach the 20,000 page mark. He is probably already hard at work planning Mansion Taxes, additional levies on the banks and heaven only knows what else.

This was posted in Bdaily's Members' News section by Jason Tucker .