Tax specialists and corporate taxpayers have reacted with dismay to the unclear measures to introduce intra-UK transfer pricing regulations and a crackdown on tax avoidance schemes in the UK Finance Bill. The UK Treasury released the 584-page Finance Bill for its first parliamentary reading on April 8 2004.
By introducing transfer pricing rules to both domestic and cross-border transactions, the UK hopes to avoid any potential challenge from the European Court of Justice that its tax system discriminates against non-UK companies. The transfer pricing rules take effect from April 1 2004, but companies have yet to receive clear guidelines on how they will apply.
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Tony Beare: Taxpayers are faced with huge compliance burdens |
Companies and their advisers are in a similar position regarding plans to crackdown on tax avoidance schemes. Tax advisers at law and accounting firms will have to register with the Treasury if they offer any tax avoidance schemes to their clients. There are even suggestions that this will apply to corporate tax managers as well.
Steve Walsh, group tax manager at National Express, a transport company, in London, said the new transfer pricing rules would be the biggest issue for him. "We have about 200 companies in our group and having to review all of them without any change to the tax liability takes a lot of time and money," said Walsh. "There's a bit of a resigned air about the place over this."
Walsh thought the government's strategy to comply with EU law would work but was not happy. "I understand why it (the new transfer pricing regime) has been done, but it doesn't make it less of a hassle for us," he said.
Tony Beare, head of tax at Slaughter and May in London, was equally downbeat about the Finance Bill. "I just despair with the way things are going at the moment," said Beare. "Taxpayers are faced with huge compliance burdens with the domestic transfer pricing rules and the increased disclosure requirements. There is a general feeling that certain things have not been thought through."
The Bill is subject to parliamentary debate and amendments before receiving royal assent, which is expected at the end of July. The Bill receives a second reading on April 20 2004.
