CIoT in bid to save mixer companies
The Chartered Institute of Taxation has launched a bid to save mixer companies which the government wants to abolish under Budget measures to close multinational tax loopholes.
The institute has sent a proposal to the Inland Revenue which it says will achieve the government’s objectives by making smaller amendments to the legislation than those proposed.
Heather Self, chairman of the CIoT said: ‘We believe that the government’s objectives can be achieved without the wholesale disruption and cost to British industry which would follow from the abolition of mixers.’
Mixers enable UK companies investing overseas to average their overseas tax rates, and only pay additional UK tax if the average rate is less than the UK corporation tax rate of 30%.
The government’s proposals would require companies to pay additional UK tax when the local rate overseas is less than 30%, but would not allow any credit for taxes paid overseas in excess of 30%.
The institute believes that amendments already included in this year’s Finance Bill are sufficient for the government’s purpose.
And the government has argued that mixers are unfair because small companies cannot afford to use them to obtain similar benefits to those enjoyed by big companies.
But the CIoT said the problems mixers solve are rarely encountered by small companies.
‘Particular concerns that mixers are being used to shelter low-taxed income should be dealt with under the Controlled Foreign Companies legislation,’ said Malcolm Penney, vice-chairman of the institute’s international tax sub-committee.
Double tax: It’s not too late to change your mind, Mr Brown
