Tax Policy Development

Ernst & Young’s Tax Policy Development team works with clients to develop proposals for changes in tax policy that can be taken to government, both in the UK and overseas.

Policy development provides our clients with a further option when tax acts as an impediment to otherwise commercial decisions. As well as considering possibilities for planning around issues, proposals can be made to Government for tax changes that will apply across an industry and support a stronger UK economy. Such changes can span all areas of taxation and previous examples range from extension of reliefs from Insurance Premium Tax to expansion of income tax relief for triangular travel by oil rig workers.

In addition to finding solutions within the existing tax system, we offer the capability to develop alternative plans and proposals that can form the basis for changes in the tax system in the future.

Helping Britain thrive

In 2001, Ernst & Young’s paper Keeping Britain Competitive examined the competitiveness of the UK tax regime in the context of Labour’s second term. Now we ask whether the challenges identified then have been resolved and whether the UK faces any new challenges in the current economic, political and technological environment. 691K, March 2007

What is tax policy development?

Unlike a traditional lobbying service, Ernst & Young policy development involves working with our clients to develop technical policy options in a form that is used inside Government today – covering economic issues, tax legislative concerns and fiscal costings. This ensures that the proposals can be implemented with the minimum of delay, that the concerns of Government policy-makers are addressed and that such proposals have the maximum chance of adoption.

Why is there a need for tax policy development?

Tax policy development offers the company a chance to create a new environment in which it can achieve its objective. By working with the Government to obtain policy change, the company is able to get certainty as to how it will be taxed and avoid risks related to other options, such as tax-related structuring.

In an era where the Government is focusing on actively identifying and countering tax avoidance, and where there has been considerable media coverage on particular ‘tax avoiders’, policy development offers a low risk alternative.

Why is there an opportunity?

Governments are rightly sceptical of companies requesting special treatment for themselves and undertaking ‘special pleading’ for ‘single company issues’. As a result, not all situations will be appropriate to this approach. However, what at first glance might seem to be a unique situation can be a market issue which currently only one business is facing.

Situations that lend themselves to this approach include ones where:

• a commercial decision is being distorted by the tax system
• a commercial decision is being frustrated by the tax system
• the tax system provides an incentive to act in a way contrary to other Government policy, or
• tax is the most appropriate policy instrument to affect a commercial decision.