The Chancellor of the Exchequer yesterday handed down his 2014 Autumn Statement. He made a number of announcements which will impact the UK tax environment, in some cases significantly. It is clear that one of the Government's principle aims in this pre-election Autumn Statement is its continued support for the "fair share of tax" campaign and its stand against tax avoidance.
The express statement of the Chancellor and of this Government since the last general election has been that 'Britain is open to business'. This has manifested itself in a host of tax measures and reform which have halted a wave of corporate migrations away from the UK. The resulting UK favourable holding company regime has also encouraged corporate migration into the UK, and helped restore confidence in the stability of the UK tax system. But it has also led to political and media commentary that the UK is becoming a tax haven, in contrast according to some with the UK's express support for the G20 and OECD initiatives focussed on companies paying their 'fair share of tax', and on the base erosion and profit shifting (BEPS) project. There are aspects in yesterday's Autumn Statement which may indicate that the Government is in response to such voices shifting its approach somewhat. It is arguable that the sheer number of tax avoidance measures, including those to long-established practices such as B share and cancellation schemes, represent a shift in the Government's attitude. Time will tell whether these may make the UK a less competitive place to do business.
Some of the key measures announced include:
- The introduction of a 25% diverted profits tax applying to profits of multinational enterprises diverted from the UK, likely reflecting the Government's commitment to the OECD BEPS project.
- Implementation of the country-by-country reporting proposals produced by the OECD as part of the BEPS project.
- Consultation on new rules to address the tax treatment of hybrid mismatch arrangements and differences between countries' rules to avoid tax. Again this seems to follow an OECD BEPS project recommendations.
- Banks prevented from obtaining full tax relief for carried forward tax losses.
- Overhaul of the stamp duty land tax (SDLT) regime in relation to residential property.
- A focus on offshore tax evasion by strengthening civil penalties and reviewing the existing framework for offering information on offshore tax evaders.
These measures are discussed in detail in our briefing which can be found here.
A link to the HM Treasury Autumn Statement website and full documentation can be found here.