Biggest tax review for 30 years published
The Mirrlees Review of the tax system was published today. The Review – which can be accessed here with the accompanying press release here – contains various proposals of interest to Corporate lawyers, including:
- The merger of income tax and National Insurance;
- The imposing of a VAT-equivalent on financial services; and
- A reiteration of the often-made argument that debt and equity investments should be treated equally by the tax system (the deductability of debt interest tending to make debt a more attractive method of raising capital for companies):
“The corporate tax system favours debt finance over equity finance, increasing the tendency towards an excess reliance on debt. The review proposes that an Allowance for Corporate Equity should be introduced into the corporation tax. This would ensure equal treatment of equity- and debt-financed investments and that only profits above the normal return to capital invested are taxed.”
The Review is an independent analysis of the UK tax system and of course not binding on HM Treasury.
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