CBI Tries To Resolve UK 'Mixer' Tax Imbroglio

Jason Gorringe, Tax-news.com, London

07 June 2000

Digby Jones, director general of the Confederation of British Industry (CBI), has had a series of private meetings with Tony Blair (see, he wasn't house-parenting after all) and is now working on a plan to find a way through the 'mixer' tax controversy which will placate British industry in general and Chris Gent in particular, while not forcing the Treasury into a humiliating climb-down.

The Prime Minister's office said they were listening to the CBI, but said they had not received any proposals yet. It is not an easy situation for the Prime Minister, who wants to be seen to be responsive to business in the run-up to the next election, but equally doesn't want to exacerbate his occasionally prickly relationship with Gordon Brown by interfering in the spat between industry and the Treasury.

The Treasury's original estimate of £300m as the cost of abolishing 'mixer' tax relief for UK-based international companies was widely rubbished by business, which said the bill would be anything up to £5bn. Last week's outburst by Chris Gent put a price tag of £500m on Vodaphone's loss to the Treasury, but was regretted by most business leaders, who know that the best result will be got through truly secret negotiations with Inland Revenue mandarins and not through public posturing or megaphone diplomacy.

Digby Jones will do well if he can find a way of squaring this circle; but the truth is unfortunately that his 'secret' planning may just be counter-productive.

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