UK Company Tax Survey Throws Up Surprising Result

by Robert Lee, Tax-News.com, London

02 November 2005

Contrary to popular perception that the UK tax system tends to stymie the growth of an enterprise culture, a new survey by the professional services firm PricewaterhouseCoopers has arrived at the surprising conclusion that the majority of firms based in Britain are fairly happy with the UK tax regime.

Results from a question posed by PricewaterhouseCoopers in the Lighthouse Global Tax Tracker 2005 study, revealed that over two thirds (69%) of respondents said that the UK tax regime is ‘fairly good’ for enterprise. Interviewees included financial directors, CFOs, tax managers, tax directors, CEOs and MDs from UK private companies, the FTSE 350, AIM listed companies and foreign subsidiaries.

“It is good news that the UK tax system is considered satisfactory for enterprise by a significant proportion of businesses. This may be partly attributed to a number of initiatives introduced by the Government to support business enterprise - for example, low headline tax rates and tax incentives such as 10% taper relief and tax credits for research and development," observed Kevin Nicholson, UK head of enterprise and private companies and clients, PricewaterhouseCoopers.

However, while the survey may show the UK tax regime in a more favourable light than had been previously thought, PwC believes that there is more that can be done to help companies negotiate the UK tax system's administrative processes.

An announcement last week by the Department of Trade and Industry (DTI) and HM Revenue & Customs (HMRC) introducing clearer guidance on research and development (R&D) tax credits for small and medium sized enterprises (SMEs) represents a small step towards this goal, and one that Mr Nicholson hopes that Chancellor Gordon Brown will repeat in his pre-Budget speech.

“The administrative process for applying and qualifying for tax relief can be quite confusing and complex, particularly for smaller businesses. We welcome this new initiative from the DTI and HMRC and would encourage further improvements to the guidance provided by the Government for other tax incentives," Mr Nicholson stated.

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