Tax system needs ‘comprehensive reform’
Majority of UK businesses back tax reform
The UK tax system is in urgent need of drastic reform if it is to effectively stop tax avoidance, according to study of business leaders.
The research, conducted by the Institute of Directors (IoD), showed that the majority of businesses advocate a complete redesign of way the entire UK tax system operates to scrap the current artificial boundaries between things that are close commercial substitutes.
However, it said that, while it is true that some businesses present more opportunities for avoidance than others – for example, avoidance is much easier for financial institutions than it is for engineering firms – the fault lies with the tax system itself and not businesses that avoid it.
According to the IoD, as taxpayers are finding ever more contrived ways around anti-avoidance legislation, forcing the government to propose increasingly complex legislation in response.
The IoD report also highlights the moral ambiguity of tax avoidance, and the fact that those who engage in extensive tax avoidance essentially negotiate paying less tax than those who do not.
The IoD also acknowledged that although tax avoidance is generally frowned upon, no-one has the moral standing to say that a business has acted wrongly if it acts within the law to reduce its tax burden.
Head of taxation at the IoD Richard Baron, said: “Reforming the tax system would obviously not be an easy task. It would mean some drastic changes. However, the task may still be worth undertaking as the current approach is leading to an impossibly complex and confusing tax system.”