Commenting on the overall Autumn Statement, Jonathan Riley, Head of Tax, Grant Thornton UK LLP said:
“In today’s Autumn Statement the Chancellor was at pains to draw what positives he could from a gloomy November picture of deteriorating public finances. Borrowing is set to increase. And growth will be slower. Tax revenues are down on forecast and with reduced growth, these revenues will fall further.
“There was much talk in the media as to the ‘JAMs’ – those just about managing. In many respects from a public finances perspective, the Autumn Statement was a case of jam tomorrow. It now won’t be at least until well into the next Parliament that public borrowing will start to fall, peaking at £122bn more than forecast in March 2016. Even this is dependent on a lot of variables.
“In these circumstances news as to an additional £23bn of spending aimed at boosting the UK’s lagging productivity were welcome, our research with the CEBR shows that if businesses and policy makers could address the productivity gap and reach the G7 levels this would mean a GDP boost of £382bn by 2025. More money for infrastructure and housing, as well as research and development – all trailed in advance of the Chancellor’s speech. They key thing now is to see spades in the ground and supply of land for housing and associated infrastructure resolved.
“International trade will also be vital for the UK in a post Brexit environment. Additional spending on UK Export Finance is welcomed but again, more could be done to encourage more the 69% of UK businesses who currently don’t or who wouldn’t consider exporting to do so.
“Although mainly about the public finances and spending, there were specific references to tax. And the usual ‘u’ turns on specific measures so recently introduced. The end of the Employee Shareholder Share scheme introduced by the Coalition government has been ended with immediate effect. Measures may be introduced to restrict the use of incorporation by the self-employed, which Mr Hammond said had gone a long way to reduce tax revenue. Even though in large part this rush to incorporation has been driven by the big reductions in Corporation tax already seen. The Chancellor will also put into effect measures discussed at the time of the Budget earlier this year relating to large corporates and those who have multijurisdictional activity, and carry a large proportion of debt.
“And the usual raft of measures – details to follow – to close down aggressive tax avoidance. As expected, the Chancellor announced that legislation would be introduced to penalise not just those who use defeated tax avoidance measures, but those who enable it – including professional advisors. The detail of this legislation needs careful review as it might easily catch planning that is intended by Parliament.
“But on tax this was a missed opportunity. The UK has one of the most complex tax regimes in the world. As found by Grant Thornton research, companies are willing to pay at least the same amount of tax in return for stability and certainty. But the tinkering will continue rather than the use of an opportunity for a root and branch review so we have a tax regime fit for a digital age, one that helps build a vibrant economy.
“Finally, one thing the Chancellor may as well have done is abolish Christmas for many in the tax profession. A change to a full Budget in the Autumn will mean much poring over legislation over the festive break. Happy Christmas!”