Is corporation tax out of date?
8 February 2016 by Thomas Utting
Nigel Lawson, former Chancellor of the Exchequer under Margaret Thatcher, believes it is. Lord Lawson has stated that it is “grossly unfair on smaller businesses” and should be replaced with a tax on sales.
The comments came after Google came to an agreement with HMRC to pay £130m in tax dating back to 2005. The former Chancellor stated that he was not happy with how large, multinational corporations such as Google were able to get away with paying tax as a result of ad hoc deals.
Corporation tax is charged on profits produced by companies whether they are generated through business, investments or the sale of assets. However, multinational corporations have devised ways to allocate their profits to whichever tax jurisdiction is most favourable to them, thereby minimising corporation tax payments.
Unfortunately, small and medium sized businesses do not have this option available to them and it is this which led Lord Lawson to call corporation tax “grossly unfair” and to suggest replacing it with a tax on sales which cannot be re-allocated to suit a company’s needs.
However, the suggestion has been criticised by the tax policy director of the Chartered Institute of Taxation who stated that frustration with this problem should not lead us to abandon corporation tax and that there are more feasible solutions available.
What are your views on this issue? Do you feel that your business has unjustly suffered from the corporation tax rules? Do you agree that a tax on sales would be a fairer solution? We would love to hear what you have to say so please leave a comment in the comments section below.
RT @FJGFoundation: Join us for a night at the races with the FJG Foundation - Friday 5th May, 7.30pm at the Colchester Masonic Hall #charit…3 days