The planned reforms set out in the Business Tax Roadmap fall into two broad categories: those which are designed to implement the action points from the OECD/G20 BEPS Project (for example, the new anti-hybrid legislation and the introduction of the interest barrier rules); and those which are not (for example, the changes to business rates and the reform of the regime that applies to corporation tax losses). The Roadmap includes a timetable for implementation of these proposals, which is challenging to say the least.

Since the publication of the Business Tax Roadmap, the EU has issued its own Anti-Tax Avoidance Directive (ATAD), which, in part, seeks to co-ordinate the introduction of some of the measures derived from the OECD/G20 BEPS Project across EU member states. The final version of the EU ATAD was in far less prescriptive form than earlier drafts and allows EU member states until 31 December 2018 to implement the various measures.

If the Government pursues the original timetable for the BEPS-related proposals that are included in the Business Tax Roadmap, which would see both the interest barrier rules and the new anti-hybrid rules introduced in 2017, the UK may find itself with rules for the deductibility of finance costs that are more restrictive than many other EU member states. So one question for the new Chancellor will be whether he wants the UK to remain at the vanguard of the implementation of the BEPS-related measures or whether he might take the opportunity presented by the Brexit vote to defer implementation and gauge the appetite for, and the form of, BEPS-related reforms amongst the UK’s EU-based competitors.

The Business Tax Roadmap timetable was, of course, also significantly influenced by HM Treasury’s target to eliminate the budget deficit by 2020. Following the EU Referendum, that target has been dropped. With the target removed, there is an opportunity for the Government to adopt a slower, more measured pace of reform than previously anticipated. This point applies equally to the purely domestic matters within the Business Tax Roadmap such as the reform of the regime that applies to corporation tax losses as it does to matters that are designed to implement the OECD/G20 BEPS proposals. Any relaxation in the timetable for those measures will be welcome to allow proper consideration of the implementation of the reforms. Furthermore, the removal of the financial straightjacket might also provide a little more freedom to simplify some of the complexities in the current proposals, such as the retention of some aspects of loss streaming. Wishful thinking?