Brexit tax: What UK business needs from the new Treasury team
Donald Drysdale considers what UK businesses need from the new Chancellor and his Treasury team.
Stability and certainty
You’ve probably read from many sources that the UK is still in the EU and that “nothing has changed yet”. Don’t you believe it! In order to thrive, businesses need stability and certainty – two concepts that seem to be in short supply, at least for the time being.
The biggest challenge facing Theresa May’s new government is how to demonstrate swiftly and robustly that the UK economy is on a sound footing. This is necessary to attract inward investment and discourage businesses from moving abroad. It is also needed to support existing businesses encountering a sudden drop in business and consumer confidence.
The new Chancellor
Tax is only one part of the jigsaw puzzle – but an important part. The arrival of Philip Hammond at 11 Downing Street, replacing George Osborne as Chancellor of the Exchequer, adds an unknown factor but also gives hope of new opportunities.
Hammond seems well qualified for the role. Unlike many politicians, he had a business career in small and medium-sized companies both in the UK and abroad before entering Parliament in 1997. In opposition he gained wide experience in Health, Trade and Industry, Communities and Local Government, Work and Pensions and served more than three years as Shadow Chief Secretary to the Treasury. In government he has been Transport Secretary, Defence Secretary and Foreign Secretary before moving to the Exchequer.
The Treasury team
At a time of great change, an element of continuity can be helpful and reassuring. This comes with the promotion of David Gauke as Chief Secretary to the Treasury – a role which involves him attending Cabinet. Gauke has been at the Treasury since 2010, first as Exchequer Secretary and then as Financial Secretary, the latter role carrying key responsibilities for the UK tax system. He is well known to ICAS and other professional bodies, and regarded by many as a safe hand on the tiller.
In another of the recent government appointments by Theresa May, Jane Ellison has moved from Public Health to become Financial Secretary to the Treasury, taking over the tax responsibilities previously held by Gauke.
Business tax plans
In 2010 the then coalition government published a Corporate Tax road map which gave businesses a clear view of tax changes expected over the life of 2010–2015 parliament. By contrast, in March 2016 the Treasury published a relatively uninformative Business road map. It did little more than explain Budget measures already announced and gave no real indication of a direction of travel.
More recently, new uncertainties regarding the UK tax regime were created by Osborne’s campaign threat that a ‘punishment’ Budget would follow a pro-Brexit vote, followed swiftly by his post-referendum announcements that he would reduce the corporation tax rate to 15% by 2020 and that he had abandoned his plan to restore government finances to a surplus by that year.
It is encouraging that one of Hammond’s first actions sought to calm the fears of businesses and other taxpayers by announcing that there would be no emergency Budget this summer. Instead, there will be an Autumn Statement in the usual way – presumably in November or December.
Brexit has created huge uncertainties. It is to be hoped that Hammond may reassure businesses further by setting out a clear and meaningful business tax roadmap for the rest of this parliament. He must also resist the temptation to tinker with taxes as so many of his predecessors have done.
While stability and certainty are badly needed, businesses must also be encouraged to concentrate on maintaining profitability and creating employment. Red tape must be reduced, and administrative burdens and costs cut to the bone.
One of the greatest boosts that Hammond could give to smaller businesses would be to abandon Osborne’s pre-existing plan for Making Tax Digital – which will otherwise force them inappropriately into digital record-keeping and quarterly online reporting to HMRC. Enable it by all means, as a valuable administrative convenience for those businesses able to benefit from it – but don’t make it mandatory.
Article supplied by Taxing Words Ltd