House of Lords report on the corporate tax system
The UK’s corporate tax regime needs urgent reform to put a halt to the “serious problem of avoidance” according to a new parliamentary report from the House of Lords.
The report states that the current system’s complexity and inconsistencies with the wider international tax framework allows large companies to shift profits between countries in ways that reduce their liabilities in the UK. It recommends that the Treasury reviews UK business taxation and, within 12 months, propose changes to be made within the UK and pursued internationally to reduce avoidance, recover revenue, level the tax playing field between UK-based firms and multinationals, and restore trust in the corporate tax system.
The cross-party group of peers suggests that the Treasury considers other approaches to the taxation of multinationals’ profits (such as a destination-based cash flow tax) and look again at fundamentals of the regime (including, for example, the differing tax treatment of debt and equity).
Additionally, in response to recent expressed concerns on HMRC’s dealing with big business, the report recommends that parliament establish a joint committee of MPs and peers to exercise oversight of the Revenue and the settlements it reaches.
Date: 6th September, 2013
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