The Budget: Big business welcomes 'new spirit' of dialogue over tax

Big Business
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Big business - which has vociferously complained over recent weeks about bearing a rising share of the tax burden - found little in the Budget to affect it one way or the other.

Big business - which has vociferously complained over recent weeks about bearing a rising share of the tax burden - found little in the Budget to affect it one way or the other.

Accountants welcomed the new spirit of dialogue in the announcements about further reforms of the tax system affecting multinationals and large businesses aimed at ensuring long-term stability and strengthening the competitiveness of business. However, they warned that there was a sense of "jam tomorrow" in the amount of consultation exercises announced.

Nicholas Woolf, tax partner with Andersen, said: "The change in tone from last year is noticeable. There were no major surprises because the focus was - as expected - on voters and not on business."

Most attention focused on details of a proposed new regime for providing relief for the costs of intellectual property, goodwill and other intangible assets.

But the Chancellor also announced a consultation paper would be published in June. It will set in a broader context proposals for a relief on gains arising on the disposal of substantial shareholdings. The process will allow investigation of reforms aimed at producing a flexible and competitive tax system for parent companies based in Britain.

In a further sign that the Government had listened to claims that corporate taxation as a percentage of GDP was significantly higher in Britain than the OECD average, he said that changes to the regime for double taxation relief announced in the pre-Budget report would be supplemented by further measures to make the system for flexible for UK-based parent companies. Existing proposals in this area had been much criticised, with some companies, notably Vodafone and BAT, threatening to move overseas if there was not a more favourable environment.

Dawn Primarolo, the Paymaster General, said the consultation proposed offered business "an excellent opportunity to shape the outcome".

Among other measures affecting larger companies were the announcement of a consultation document "Increasing Innovation" examining the case for further measures to boost UK innovation and to seek views from businesses and others on the extension of the new tax research and development tax credit aimed at encouraging larger companies as well as smaller businesses; abolition of outdated requirements for the deduction of tax on most intra-UK payments between companies of interest, royalties, annuities and annual payments; and measures to "protect the tax base while facilitating business efficiency and promoting competitiveness".

As expected, there was little in the way of anti-avoidance measures - other than a move to close a particular loopholerelating to controlled foreign companies.

However, the Government appeared to send a warning salvo across the bows of the big oil companies with Mr Brown's statement that its approach would be guided not by short-term factors but by "the need for a regime that raises a fair share of revenue and promotes long-term investment in the North Sea".

Accountants interpreted this as a thinly coded message to the industry about promoting long-term investment in the UK Continental Shelf or facing a windfall tax.