Viewpoints
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
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