David Gauke, the Exchequer Secretary to the Treasury, recently gave a speech to the Lord Mayor’s Taxation Forum. His presentation focussed on international tax competitiveness, and how the UK’s system fares compared to our overseas competitors.
Here’s an extract of his comments:
Competitiveness
“Since 2010 we’ve cut corporation tax from 28% to 21%. And this time next year it will fall again, to just 20%. To spur innovation, we’ve introduced the Patent Box and the ‘above the line’ tax credit for Research and Development.
- we’ve modernised our Controlled Foreign Company (CFC) regime
- we’ve cultivated a generous environment for oil and gas exploration
- we’re supporting the creative sector through a number of targeted tax reliefs
And at the Budget last month, we announced further tax incentives to support business, by:
- doubling the Annual Investment Allowance
- increasing the R&D credit for innovative companies
- overhauling the UK Export Finance direct lending programme
It is not just about the competitive tax rates, reliefs and allowances. How we make tax law is important. In 2010, we published a Corporate Tax Roadmap, setting out what we were going to do and also, perhaps more importantly, explaining what we were not going to do.
We have also established a new tax policy-making process, ensuring proper consultation and the early publication of draft legislation – enabling us to refine and improve our legislation. And the importance of tax administration can be under-estimated. We recognise that our tax administrators need to understand major taxpayers. We’ve made sure that the largest two thousand corporations in the UK have their own dedicated relationship managers at Her Majesty’s Revenue and Customs, who can support those organisations and help to ensure that they are paying the correct amount of tax.
And that system exists, because it’s in everyone’s interests to have a strong working relationship that will ensure revenues are paid fully, and that any disputes or queries can be played out quickly without expensive litigation.
This is not about being a soft touch. Tough action is taken wherever necessary. But a constructive relationship built on trust between the taxpayer and the tax collector continues to bring in the revenue for the UK exchequer and add to the attractiveness of the UK system.”
Be interesting to see how this “carrot and stick” approach works in the real world as the UK promotes itself as a low-tax jurisdiction, but beware if you don’t pay your dues…