Policy Initiatives
Recent Policy Initiatives
During the last six months, we made five detailed submissions to the British Government on the taxation of non-domiciled individuals, economic migration/employment related settlement, annual migration limit and associated policies, and statutory residence testing, in response to the Government's consultations/call for evidence on these five issues. In our submissions, we outlined our member companies' views and concerns about the impact that these measures would have on their business as well as on the UK’s attractiveness as a location for domestic and foreign investment, and, with the expert help of our member companies, made specific recommendations as to the actions and amendments that we felt the Government should undertake.
Over the past year we have also made formal representations to the British Government on the new UK Bribery Act, restrictions on non-EU economic migrants as well as anti-competitive fiscal and regulatory measures. Other recent policy initiatives we have carried out on behalf of our member companies have covered aviation taxes, free trade and open markets, taxation of foreign profits, the UK/US Defence Trade Treaty and electronic filing requirements.
Please see below for more information about these various initiatives.
Data Protection: In our response of March, 2012, to the Ministry of Justice's 'Call for Evidence on EU Data Protection Proposals', we outlined our concerns about the impact of the European Commission's proposals on our member companies and on the attractiveness of the UK and EU as a location for companies to invest, do business and create jobs. While we applauded the objective to harmonise the current data protection arrangements within the EU, we argued that the proposed reforms would have a potentially significant negative impact on our member companies. Our specific concerns highlighted by our member companies included the draconian nature of the proposed fines, the need to declare immediately all apparent security breaches without proper time to assess the gravity of the breach, and the requirement for all companies with 250 or more employees to employ a data protection officer. We strongly urged the UK Government to conduct adequate consultation with the UK business community on the likely impact on UK companies and other companies operating within the UK, before the introduction of any resultant regulation.
Please click here to read a copy of the letter
Economic Migration: In our submission of December, 2011, to the Migration Advisory Committee's (MAC) call for evidence on the annual migration limit and associated policies, we argued that any measures taken to reduce the current quotas for non-EU economic migrants would be a costly error and would send out the wrong message to the international business community, noting that employers had found the process of assigning the required 'Certificates of Sponsorship' to be frustrating and inflexible. The Government has sinced reviewed the MAC's report and has announced that the annual limit for Tier 2 workers will remain at its current level until April 2014.
Please click here to read a copy of the letter.
Economic Migration: In our response of September, 2011, to the UK's Border Agency’s consultation on economic migration and settlement in the UK, we highlighted our concerns about the proposed additional limitations to be placed on highly skilled workers coming into the UK. We stressed, as we had done in previous submissions, the importance of allowing companies to bring such workers into – and retain them in -the UK; and noted the negative impact on the UK economy and on foreign investment in the UK, if the option to keep certain skilled workers beyond the imposed five year limit was removed. We urged the Government to keep the immigration route for skilled workers flexible and to conduct an economic impact assessment before making any changes that could damage the short and longer term business interests of the UK. Following our representations, the government extended the 5 year limit for Tier 2 workers by a year and will continue to provide a route to settlement, providing that certain skills/criteria are met.
Please click here to read a copy of the letter.
UK Taxation of Non-Domiciles: In our submission of September, 2011, in response to HM Treasury’s consultation on proposed reforms to the taxation of non-domiciled residents, including notably U.S. citizens, we noted the likely negative impact of these reforms on our member companies and on US investment into the UK, and urged the Government to provide absolute clarity about the tax impact of the proposed reform on the overall tax position of U.S. citizens. We were pleased to receive an immediate response from the government clarifying certain issues to our satisfaction and providing welcome simplifications to some of the complex non-dom rules that came into effect in April 2012. However, we remain concerned that certain affected U.S. individuals now face a higher annual charge which may impact on their decision to remain in the UK.
Please click here to read a copy of the letter.
Statutory Definition of Tax Residence: In our response of September 2011, we outlined the importance of the Government providing certainty as to which individuals have the status of being resident in the UK for tax purposes and how the regulations will apply in practice to our member companies looking to bring workers into the UK. We are pleased therefore that the government will delay the introduction of the legislation by a year and organize a further consultation. This will enable us to press again for the certainty our members are seeking.
Please click here to read a copy of the letter.
UK Bribery Act 2010: Following widespread concern about the uncertainties surrounding the Bribery Act 2010, we wrote to the Lord Chancellor and Secretary of State for Justice in February 2011, stressing that the as-yet-to-be-published Guidance on the application of the Act must clarify a range of issues e.g. from what exactly are considered to be “adequate procedures” companies must take to prevent bribery to exactly what are acceptable levels of corporate hospitality. The Lord Chancellor responded to our representations, and we were subsequently pleased that the government took account of our concerns on the ‘adequate procedures’ issue, the transatlantic differences on the treatment of facilitation payments and on acceptable levels of corporate hospitality. However, we still remain concerned about certain aspects of the Act and will continue to monitor its practical impact on our member companies with a view to possible further representations on this issue.
Please click here to read a copy of the letter.
Economic Migration:
In September, 2010, we responded to the British Government’s invitation to comment on their proposals to limit non-EU migration into the UK by submitting a detailed paper outlining our concerns: namely, that these proposals, and in particular any restrictions on intra-company transfers, would be very damaging to the interests of our member companies and to the UK’s reputation as an investment location, and reinforce the view that the British Government no longer fully understood the needs of business or the demands of a competitive global market.
In November, the Government announced its decision to exclude intra-company transfers from the cap, as we had argued, albeit subject to a minimum salary requirement of £40,000 and maximum stay of five years; but to reduce the number of other skilled workers allowed into the UK from outside the EU by 6,300 (less than we had feared, but more than we would have liked) to 21,700.
In our response, we welcomed the Government’s acceptance of our argument on intra-company transfers. But we noted with regret the new salary and term restrictions, and the reduction in the number of other non-EU skilled workers allowed into the UK, and undertook to monitor the experience of our member companies as these new rules are implemented and to continue to represent their views to government on any resulting impediments to the conduct of their business in the UK.
Please click here to read a copy of the letter.
UK-US Defence Trade Cooperation Treaty: Having actively promoted the progress of this important Treaty since it was submitted to the US Senate in 2008 following its ratification in the UK Parliament, we were delighted to welcome the Senate’s approval of the Treaty in September, 2010. The Treaty will greatly help UK and US companies looking to sell equipment and services to the armed forces of the other county, as well as help facilitate greater cooperation in defense between the UK and US.
Fiscal and Regulatory Policy: In March 2010, we wrote to The Chancellor of the Exchequer and the relevant shadow ministers in the Conservative and Liberal Democrat parties, expressing our members’ concerns about the impact of recent fiscal and regulatory changes on their business interests, and also on perceptions of the UK as an investment location and therefore on likely future levels of foreign and domestic investment in the UK. The issues highlighted in the letter included: the non-domicile tax; intra-company personnel transfers; taxation of foreign profits; and increased income tax rates. We continue to register our member companies’ concerns regarding these measures and endeavor to identify any new policies that could be damaging to the competitiveness of the UK and its ability to attract inward investment.
Please click here to read a copy of the letter.
Immigration: We are pleased to report that in early 2010, the UK Government accepted all of the Migration Advisory Committee’s (MAC) recommendations for change to the UK’s immigration legislation, including two specific proposals that we had urged the MAC to adopt that will make it easier for UK and foreign companies to bring qualified employees into the UK. These measures provide for the admission of employees with overseas qualifications in fields such as Law and Accountancy, and with Bachelor’s degrees provided that their previous earnings meet the required level.
Aviation Duty: We note with concern that the Government plans continuing with an element of Air Passenger Duty (APD) once the aviation sector in the UK joins the EU Emissions Trading Scheme (ETS) in 2012. We will continue to register our concerns about the negative impact the UK’s uncompetitive aviation taxes will have on the business community, on the tourism and aviation industries, and on inward investment into the UK and urge the UK government to abandon the tax, in line with our European counterparts, once the ETS comes into force.
Taxation of Foreign Profits: Following our earlier (partially successful) representations to the British Government in response to its consultation paper on the Taxation of Foreign Profits of Companies in the UK in 2008, we made further representations in 2009 about the negative impact of the proposed worldwide debt cap, since this would encourage tax bills for the cash-rich with no equivalent penalty for those with higher levels of debt. We were therefore disappointed that the government decided to proceed with the debt cap, albeit with a delayed implementation date.
G20 and the Preservation of Open Markets: In March 2009, we wrote to the Chancellor of the Exchequer outlining our hopes for the outcome of the G20 Summit held in London. We are pleased the Communiqués from the G20 Summit in both London and Pittsburgh included satisfactory pledges to fight protectionism and to conclude the Doha Round, but recognize that the implementation of a globally coordinated approach will be a much greater challenge.
UK Taxation of Non-Domiciles: In response to proposed changes to the taxation of non-domicile residents, including notably U.S Citizens, we made strong representations to the Chancellor of the Exchequer, detailing our concerns about the impact of these measures on many of our member companies, and also on the attractiveness of the UK as a desirable location to conduct business. Following extensive meetings with the Finance Secretary and senior Treasury officials, we were pleased that our representations resulted in some positive changes to the proposals. (Please see above for our response to the 2011 non-domicile taxation consultation).
E-filing of US Tax Returns: In response to concerns expressed by our US members, we made representations to the IRS about the new e-filing system for US tax returns, including issues such as software incompatibility. Following a series of meetings and discussions we are therefore pleased that our proposed improvements to the system highlighted in the letter have been registered and subsequently addressed by the IRS.
