Review of UK tax system needs to balance public confidence with business certainty, says EY’s UK head of tax

31 July 2013

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John Dixon, Managing Partner Tax, UK & Ireland, at EY, comments on today’s report from the House of Lords Economic Affairs Committee:

“A competitive tax system based on the rule of law is important for the UK economy, business, investors and the capital markets. The tax system is not broken, but we absolutely do need to rebuild the confidence of the public that the tax system is operating as Parliament intended. We will continue to play our part in this and would welcome the opportunity to contribute to the proposed HM Treasury review.

“We note the House of Lords Economic Affairs Committee’s recommendation that tax advisers should be regulated. The tax profession already adheres to a Code of Conduct, which was reviewed by HM Revenue & Customs. The code is based on the fundamental principles of integrity, objectivity, professional competence and due care, confidentiality, and professional behaviour. We would welcome discussions as to how this might be enhanced.

“The UK continues to be the most attractive location for inward investment across Europe, according to EY’s annual attractiveness survey, and seems close to achieving its ambitions of fostering the most competitive tax regimes in the G20. But in order to maintain this leading position, any review of the UK tax system would need to carefully consider the international implications. Tax measures also need to balance reinforcing the confidence of the taxpayers in the tax system, with providing business with confidence that they can invest for the long-term.

EY recommends:

“We would like to see further clear Roadmaps, now that the elements of the Corporate Tax Roadmap have been broadly delivered. These could instead focus on the different types of taxpayer (i.e. employees, businesses etc.) so that investors would have clarity over how they will be treated. The Roadmaps would need to cover all the taxes relevant to the particular type of taxpayer, and could be expanded to cover other government interventions. This would help improve competitiveness and certainty.”