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Budget 2011: nothing to fear

The Budget was positive for most corporate groups with an extension of capital allowances no increase to VAT and the 1% reduction of corporation tax. The latter was a deviation from HMT’s previous statements about aiming for a tax regime with ‘no surprises’ and slightly frustrating from the point of view of tax forecasting – however don’t bite the hand that feeds you! Tax directors of international groups will be preparing for another year of consultation on the full CFC changes but will be relieved to be able to report to their boards that the comments made by the business community on the interim CFC changes and the taxation of foreign branches have been heard by HMT in particular the concerns raised by the financial services sector.

The proposed merger of income tax and NICs was a surprise. Businesses with globally mobile employees may...

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