Why British Companies Are Still Losing out over EU Tax Regime; LEGAL&FINANCE Midlands Businesses That Are Facing Tumultuous Times on the Stock Market Have Additional Burdens to Bear on Cross Border Transactions, Says Phil Warner, International Tax Director at RSM Bentley Jennison in Birmingham
Byline: Phil Warner
The worst thing about sitting in a traffic jam is the uncertainty, not knowing for how long you'll be road-wrecked, while your international competitors glide down their easy-flow motorways gaining access to your customers effortlessly.
Such is the sad state of affairs with the UK's international tax regime that we are experiencing the mother of all traffic jams. Why the jam? Because the European Court of Justice (ECJ) keeps handing down tax case decisions that effectively tell the UK to drive on the right in accordance with European Law.
The UK's line (from the Government and HM Revenue and Customs) is that under domestic tax law we drive on the left.
In the meantime our European competitors are moving increasingly towards exempting overseas dividends and attracting business from the UK.
Whichever way you look at it, UK tax law, as presently drafted, is seriously incompatible with fundamental European freedoms enshrined both in the European Treaty and in the EU Tax Policy document which was adopted by member states as far back as May 2001.
It is not surprising that it is incompatible as most of it was drafted long before 2001. British business (Marks & Spencer, Cadbury and Vodafone to name a few) has noticed this and has got the European Court of Justice to confirm it. The problem is that overseas businesses are also noticing the situation and comparing our tax system with those in other European countries. …