UK Business Calls For Stable Tax Regime

by Robert Lee, Tax-News.com, London

30 October 2009

Only a third of private business owners in the UK believe that the country's tax regime supports and encourages enterprise, despite the wide range of available tax reliefs available, a new survey has found.

According to the the findings of the 'Enterprising UK 2009' survey by PricewaterhouseCoopers, 84% of private business leaders agree that a more effective voice within government would pave the way forward, supporting UK enterprise for the future. Simplicity and stability of the UK’s tax system was also cited as a major concern, with a quarter of respondents calling for a reduction in uncertainty and the rate of change, up from 8% of respondents in 2006 and 17% in 2007.

Mary Monfries, head of UK private business at PricewaterhouseCoopers LLP, commented: “Private business is calling for a stable, certain tax environment in which to conduct their business successfully. Reducing tax rates would be a challenge in the current economic climate, but a reduction in the rate of change and uncertainty should be easier to deliver."

The survey also showed a mixed picture in awareness levels of the different tax reliefs available to UK private businesses. In some instances this awareness has declined since the survey was last published in 2007.

While tax relief usage levels remain relatively low, a number of reliefs are targeted at specific problems, so businesses in different sectors would not necessarily be aware of their existence. The highest awareness levels of the 12 named schemes in the survey, known to more than eight in ten companies, were research and development tax credits, tax deductions for employee share scheme rewards and first year allowances for the acquisition of capital assets.

Environmental relief has a seen an increase in both awareness, up five percentage points to 67% (from 62% in 2007) and usage, rising six percentage points to 17% (from 11% in 2007).

According to PwC, this demonstrates that private businesses in the UK are taking their role in environmental issues seriously, incorporating measures into their strategy.

Private business owners agreed that it is their duty to pay their fair share of tax, but like any other cost to the business, they will seek to reduce the size of the bill, the survey showed.

Monfries noted: “Tax is a cost, and it is prudent that private business leaders are seeking to minimize all costs at this time, including tax, legitimately.”

She added: “Private business leaders are committed to the long-term success of the economy, and need stability to enable them to make sensible commercial decisions. They are calling on government to stop tinkering and provide more certainty in the tax regime and regulation more broadly.”

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