Finance Bill 2010

Detailed draft legislation and commentary has now been issued in place of the Pre-Budget Report, principally concerning corporate tax reform but also dealing with a diverse range of anti-avoidance measures, technical legislative improvements and reiteration of previous announcements.  The main announcements have been driven by the Government’s commitment to modernise corporation tax, engaging with business to enhance UK tax competitiveness. With over five hundred pages issued, the scale of their challenge is clear.  The Government’s aim is for the UK’s corporate tax regime to be promoted as the most competitive corporate tax system in the G20 by the end of the current Parliament, to be achieved based on the following framework: 

Measures of competitiveness	Principles of reform
Main rate of corporation tax	Lowering rates while maintaining the tax base
Definition of the corporate tax base	Stability in the tax system
Quality of tax policy making	Alignment with business practice
Administration and collection	Avoiding unnecessary complexity
	Level playing field for all

A positive effect of the new framework is that so much draft Finance Bill legislation has been released for consultation and scrutiny some three months before the Budget, rather than after the Budget with the usual rush to finalise it before the summer recess.

The principles and direction are all very sensible, pragmatic, well-engaged and business focused.  But there is still a very long way to go, and many more changes in legislation and HMRC application required, to achieve the desired result.  If the intention is for the corporate tax system to become a national asset that makes the UK an attractive place to relocate to, then we may now have gone far enough to stem the tide of leavers - at least as a consequence of our corporate tax system.

This update focuses on the main announcements and their possible relevance to your business.  We look forward to the next major instalment in the Budget on 23 March 2011.

To find out more, please click here to download our Autumn 2010 update.