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ViewpointsCommercial Property M5 and A38 corridor

Lawyer urges developers to support PM's tax break
By Nick Trowell, Commercial Property Lawyer, Heatons, Manchester
Developers are missing an easy trick and losing out on hundreds of thousands of pounds.
Under the government's Land Remediation Relief initiative, developers who clear derelict and contaminated land of pollutants such as Japanese Knotweed, Giant Hogweed or asbestos, can claim relief which will reduce their tax liabilities by substantial amounts.

One of the biggest problems faced by developers is Japanese Knotweed, one of the most invasive and destructive weeds in the UK, which is believed to infest every 10 sq km of land. It spreads quickly and is capable of growing through tarmac, joints and cracks in concrete slabs, cavity walls and drains. Knotweed thrives on derelict brownfield sites, where it can grow unchallenged and cause serious problems for regeneration projects. Without swift action, it can create costly delays to building work.

Landowners and developers are legally obliged to control Japanese Knotweed infestations on their land, and face prosecution if they allow it to spread by disposing of it carelessly, cutting it or moving earth contaminated by it. With an estimated cost of £1.5bn to control it, the building industry has been lobbying for support to tackle the issue but too few developers are applying for the tax relief which they have fought so hard to get. Very few developers are claiming the tax relief they are entitled to. They have a legal obligation to clear the land of these pollutants anyway so they aren't being asked to do anything extra to claim the tax relief.

All they need to do is keep copies of the invoices they have received for the remediation work and let their accountant take care of the rest. The amounts in question could have a big impact on their bottom line so it's daft not to claim.


Budget leaves business stuck in the stalls
By Chas Roy-Chowdhury, Head of Taxation, Association of Chartered Certified Accountants, London
This seems to be largely a Budget of delaying tactics. Rather like the Cheltenham racers, businesses are left waiting in the stalls by the announcements. We knew what was coming for business, but the Budget still penalises entrepreneurs and SMEs.
ACCA welcomes the Government's renewed focus on increasing the number of female owned businesses. But it is important to note that the Government has missed its previous target of achieving 20% more female enterprises by 2006. What will be different this time round?

The Chancellor's announcement that BERR will consult on radical new proposals about the amount of regulation for SMEs is interesting. A critical assessment of the regulatory burden is needed, and qualitative and quantitative criteria should be introduced.
ACCA is pleased the Government is thinking again on income shifting, having listened to our comments about the need not to run ahead with their proposals. But this must not be a delaying tactic for what is now an unworkable proposal.
Some credit is due regarding the Chancellor's parallel Carbon Budget next year.
This is good tax policy planning in terms of certainty and transparency. The Chancellor's simplification measures for SMEs are also welcomed.

When it comes to green taxation, hypothecation - detailing where tax goes - would make paying tax more palatable because business and individuals could follow their green pound. This approach could be used following confirmation that the climate change levy will rise in line with inflation.

Business Issues
1. Capital Gains Tax – A Capital Pains Tax
No surprises here. Business has braced itself for the withdrawal of indexation and taper relief. This represents a sudden, painful and unexpected increase of 80% in the potential tax on disposal for many small business owners.
It will be interesting to know how many entrepreneurs disposed of their businesses before 5 April so that they pay only 10% CGT rather than 18%. Looking ahead, ACCA fears that the new tax rules will impact adversely on economic activity by encouraging short-termism.

2. Corporation Tax – The mixed message tax
When it comes to Corporation Tax, the Chancellor has persisted in mixed messages for businesses large and small. Corporation Tax rises to 21% in April 2008, then to 22% in 2009 for small businesses; but then the rate falls for big business from 30% to 28%. The impact will be felt unfairly by small business.

3. Non-doms – a number of minor relaxations as the levy is confirmed at £30,000
While imposing a £30,000 levy on non-doms at least meets the needs of clarity, it still does not send the right signals to talented international entrepreneurs who want to do business in the UK. ACCA is encouraged by the Chancellor's promise not to return for a second bite.

4. Cutting Carbon emissions - Climate Change Bill
National and local government, businesses and individuals need to do more to play their part in protecting the environment. ACCA therefore welcomes the Government's ambitious proposal for a statutory target to reduce emissions by at least 60% by 2050. Quantifying and promoting the financial consequences of climate change via sustainability reports is vital for success and for transparency.

5. Personal Taxation Issues
- Individual Savings Accounts (ISAs)
Increasing the cash ISA limit from £3,000 to £3,600 from 6 April 2008 is a step in the right direction; but as an incentive to save it is not convincing since the overall ISA limit is raised by only £200.
- Fuel duty deferred until October
Deferring the 2p fuel tax to October 2008 will be welcomed, but the real tax hit, with the extra half pence will come eventually, and there is no avoiding the £5.00 gallon of petrol price tag soon.
- Duty increases for cheap alcohol
An above-inflation increase alcohol duty was always on the cards to discourage heavy drinking, a social issue which concerns Government policy makers. It is hoped this tax hike will influence behaviour and deter binge drinking.
The increase has been justified by a prolonged campaign to highlight the problem of binge-drinking Britain. But again, this is an area whether hypothecation of taxes would prove to tax payers that the money raised is being targeted at specific health service programmes to tackle this problem, rather than just a way of raising more revenue for the tax coffers.
- Vehicle Excise Duty (VED)
New bands for VED will be introduced so consumers choose the least polluting cars. This is a nod to the green lobby, but it will be interesting to see how consumers react to these new tax levels.


New red tape could be an opportunity for businesses
By David Slee, Partner, King Sturge, Plymouth
The coming months are likely to see the ratification of The Planning Reform Bill and the establishment of an Infrastructure Planning Commission (IPC).

The IPC is seen, by many, as the Government attempting to sidestep the normal planning (and inquiry) processes to reduce delay, cost and risk, and provide more certainty to the system.

Indeed, it may also be the first step towards removing local authority control of the planning determination process, particularly for major or controversial proposals. Indeed, specialist teams based at the regional level are increasingly being asked to intervene in such developments.

In terms of policy, deficiencies in the current LDF system are likely to be addressed, and progress will be made in replacing out of date development plans. However, the delays incurred so far will mean that some projects - including key proposals for urban extensions - will have to be pursued through appeal. Therefore, the next two to three years may see the focus of planning on development control rather than planning policy.

The Planning Reform Bill contains other proposals. The Community Infrastructure Levy has been introduced to bring clarity to the issue of planning contributions. However, it may lead to a further 'muddying of the waters', as it tries to combine the existing system with a comprehensive roof tax, and could therefore result in additional delays.

The Bill also includes a proposal to allow minor appeals to be determined by local authorities thereby removing the applicant's right to an independent hearing. This proposal has been met with criticism by the planning profession and appears to have been included to reduce the number of appeals dealt with by PINS rather than improve the system.

Therefore, another new planning bill has been received with a less than welcoming response, and it will be interesting to see it will be implemented, given its reception so far.

 

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Last updated: 17 April 2008