Treasury promises future tax predictability

February 22 2010

The UK government today published a draft Tax Framework purporting to give large businesses greater certainty on tax policy.

The framework was developed through talks with the Business-Government Forum on Tax and Globalisation.

This committee was set up by the Treasury in May 2008 to placate multinational companies that had complained about unexpected and unfavourable changes in corporate tax policy - especially the new rules on taxation of income received by UK firms' foreign subsidiaries or controlled foreign corporations (CFCs).

The new document includes a promise to consult with business "wherever possible" before amending tax law.

Where complex changes are proposed, the Treasury will publish draft legislation "in sufficient time for interested parties to provide comments ahead of their inclusion in a Finance Bill."

The Treasury will also follow certain key principles when developing tax policy. These include:

• fairness;

• competitiveness and stability for the UK;

• minimising distortions to commercial decisions;

• simplicity;

• stability and the  avoidance of unnecessary changes to tax legislation;

• certainty;

• lowering compliance costs for business.

Chancellor Alistair Darling said the policy was intended to give businesses certainty on tax matters: "The government is committed to maintaining the UK’s competitiveness and will ensure that the UK remains an attractive location in which and from which to do business."

Sources:

Treasury announcement

Treasury consultation document (PDF)

Financial Times