UK Tax System Growing In Complexity

by Jason Gorringe, Tax-News.com, London

22 October 2004

The ever-increasing complexity of the UK tax system is putting the country at a competitive disadvantage to its competitors, the tax controller of a large UK-based firm has told the Financial Times.

According to Philip Gillett, group tax controller of ICI, new rules brought in by successive Finance Acts have taken the edge off the UK tax system's competitiveness compared to other countries which are adopting more business-friendly policies.

"It is amazing how much thicker each finance act is, how much more complex," Mr Gillet observed.

However, he added: "It is not that we are getting worse but other countries are getting better."

Mr Gillett, who chairs the tax committee for the Confederation of British Industry (CBI) employers' body, cites payroll taxes and allowances as areas that businesses are finding it harder to administer.

Another area considered to be overly complex is the definition of “earnings” for income tax and national insurance purposes. "The thing just gets more and more complicated," he noted, according to the FT.

Mr Gillet also expressed concern over new transfer pricing rules, brought about by an European Court of Justice ruling, which will require UK firms to put a price on all products transferred between different units and subsidiaries.

The ICI group tax chief expressed concern that this will place an onerous administrative burden on affected firms, and criticised the UK government for taking a “sticking plaster” approach on the issue of EU taxation.

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