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Would accountants for contractors benefit from lower corporation tax?

Would accountants for contractors benefit from lower corporation tax?

The CBI believes the government needs to reduce corporation tax further than its intended level of 24% if the UK is going to remain competitive.

John Cridland, the director general of the business group, said that tax reform should improve competitiveness and make the UK a more attractive place for investors. Lowering the corporate tax rate will go some way towards encouraging organisations to base their operations in this country but the government also needs to address the tax burden which is making the overall system uncompetitive. Furthermore, the 50% higher income tax rate is seen as a barrier to attracting much needed talent to the UK.

The CBI also has concerns about the proposals for taxing foreign companies that are owned by UK businesses. The anti avoidance measures that have been included in the proposed controlled foreign companies regulations make the regime cumbersome, it says.

Foreign companies perceive HMRC as very aggressive when it comes to CFCs and whilst it is important to keep the UK tax base, any anti-avoidance measures have to be proportionate to risk and aimed at specific abuse. Investment could be deterred if measures are perceived to be too heavy-handed.

The CBI does support the Patent Box to complement the current Research and Development Tax Credit scheme but believes that more thinking is required to make the UK more competitive. The government should also implement measures to incentivise intellectual property development after the research stage but before the patentable product creation stage.

Cridland’s comments were made as part of the Confederation’s submission to the Corporate Tax Reform government consultation.

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