The Government’s goal is to make the UK the best place in the world to locate a business. We have one of the most open economies globally, a highly skilled workforce, access to capital markets, and first-class infrastructure.
We also have a highly competitive tax system. We remain committed to creating the most competitive corporate tax regime in the G20, having lowered the corporation tax rate to 20 per cent in 2015, the lowest in the G7, and the joint lowest in the G20, and announced that it will be lowered again to 19 per cent in 2017 and 18 per cent in 2020.
While we want a tax system that is competitive for businesses, we also want a tax system where businesses pay their taxes. It is clear that attitudes to aggressive tax planning are changing – and that the public, investors and stakeholders now expect higher standards of tax compliance and more transparency from large businesses about the way they approach taxation. The UK has played a leading role in the transformation of international tax transparency, working through the OECD to establish a common standard for the automatic exchange of information on financial accounts with more than 90 countries.
But there is still more to do. While increasing numbers of UK businesses are already being transparent about their approach to taxation, a number are still failing to do so. In addition, there are still a small number of businesses which simply do not play by the rules – persistently engaging in tax avoidance or highly aggressive tax planning, or refusing to engage with HMRC in a full, open and proper way. It would be unfair to the vast majority of businesses not to do more to tackle this problem, and to level the playing field for all.
We also recognise that any relationship must be built on clear and fair guiding principles, and that the relationship between HMRC and our large businesses should be no different. For these reasons we are proposing to introduce:
- A legislative requirement for all large businesses to publish their tax strategy, enabling public scrutiny of their approach towards tax planning and tax compliance;
- A voluntary ‘Code of Practice on Taxation for Large Business’, which sets out the behaviours which HMRC expects from its large business customers; and
- A narrowly targeted ‘Special Measures’ regime to tackle the small number of large businesses that persistently undertake aggressive tax planning, or refuse to engage with HMRC in an open and collaborative manner.
These new proposals will continue to cement best practice amongst large businesses operating in the UK, contributing to the achievement of our ambition to make the UK the best place in the world to do business.
Read more detail in this article: ‘Improving Large Business Compliance‘