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32 . Glasgow Business May/June 2013

Paul Gallagher

business. He said: “Overall, I think it’s been positive. It helps businesses of different sizes and promotes growth. “Te reduction of the main rate of

corporation tax is welcome. International investors look at the headline rate as well as the underlying tax rules, and the UK rate compares very favourably with the other major trading jurisdictions. Te Chancellor talks about creating the most competitive tax system in the world and this is an important step on the way to achieving that.” Stephen also highlighted moves on

simplification – the coming together of rates for small companies and large organisations from 2015 – and the continuation (albeit at half the previous level) of the capital gains tax holiday under the Seed Enterprise Investment Scheme, which is designed to help incentivise equity investment in very early stage companies. He added: “Te employment allowance will

be a big benefit for small businesses from April 2014 when, effectively, they’ll get an exemption from the first £2,000 of employer’s national insurance (NI). Tis will allow a small employer to bring in someone earning £22,000 or four people on the minimum wage without paying the so-called ‘jobs tax’. Tat could take a lot of very small employers out of employer’s NI altogether.”

The avoidance agenda

Tax avoidance has rarely been out of the news in recent times and George Osborne made sure that he included new measures in the 2013 budget.


Ronnie Ludwig

Stephen Dodds

No matter the changes that have been made, there’s still significant scope for

structuring your personal and business affairs in a tax efficient manner

However, Ronnie Ludwig, partner in

accountants Saffery Champness, has strong views about the climate in which the discussion around avoidance is being held. He said: “Te most important thing to remember is that tax avoidance – as opposed to tax evasion – is completely legal. Te government may talk about the moral aspects, but it’s very important we don’t confuse these things. No firm of accountants is there to sit in moral judgement on what their clients do. Tey are there to provide advice and, so long as that advice is legal and clients are told about any associated risks, that’s as far as it should go.” He pointed out that, as members of the

Institute of Chartered Accountants, all CA firms work to very rigorous ethical standards and none would advise their clients to act in any way that was illegal. Tat said, Ronnie believes that the new

general anti-abuse rule which will come into effect when the Finance Bill receives royal

QUESTION According to Ernst & Young’s Paul Gallagher, ‘the Scottish situation’ is moving up the agenda – but it’s not all focused on next year’s referendum. “Whether we become independent or not, there are some significant changes coming through in the shape of our own landfill tax, stamp duty replacement and then, in 2016, part of the income tax we pay will be a Scottish income tax. “On the referendum, some people are asking if

this is the time to invest in Scotland, and whether they should be moving in or out of the country.” In a series of surveys with leading business people titled Grasping the Thistle, Ernst & Young is examining these issues. Paul added: “The key messages

coming through are that they are looking for more engagement and

communication from government. “On corporate tax rates, people are not

necessarily looking for a big cut but are looking for a sustainably lower rate. “They are more interested in certainty than

big, one-off reductions.”

assent this summer, will be a very useful piece of legislation. “It will help make sure any avoidance schemes are treated in accordance with the spirit of the law,” he said. “It must be remembered that many

multinational companies have programmes that involve expansion in the UK. We have to be very careful we don’t stifle organisations with punitive rates of tax. “Above all, a balance needs to be struck. We

want companies to pay their fair share and nobody wants abusive or aggressive tax avoidance, because it puts up the rates for everybody else.” Paul Gallagher emphasised the need for

more certainty. He said: “I believe the UK tax system is not broken, but public confidence needs to be rebuilt. What we need to see is greater transparency and more simplification of the rules. “It’s also worth remembering that

corporation tax is quite a small part of the total tax take and the debate needs to be broadened out to include other taxes. Non-tax factors also need to be discussed – no one is talking about the increase in employment and economic growth that comes from a reduced rate of corporation tax.” Stephen Dodds added: “Both Labour and

the coalition have been very successful in closing tax avoidance schemes. Te disclosure of tax avoidance scheme rules mean promoters of tax schemes are compelled to let HMRC know about these schemes. Tere’s targeted action where a loophole’s identified then a rule introduced to close it.”

Advice on efficiency

No mater the changes that have been made, there’s still significant scope for structuring your personal and business affairs in a tax-efficient manner. However, despite the simplification efforts

over the past few years, tax is still subject to a vast amount of complex legislation. Terefore, it’s sensible for businesses to get

specialist advice on how they can pay their tax in the most efficient way and make sure they are benefiting from lawful efficiencies and exemptions. Reputable tax specialists will help businesses monitor changes in law and make sure that they benefit from efficiencies but meet their obligations.

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