Will Osborne stay true to his tax avoidance plan?


George Osborne The rumour mill is in overdrive with every tax expert worth their salt trying to predict what treats the Chancellor will pull out of his little red briefcase.

We have had speculation that George Osborne will tinker with national insurance and others think pensions could come in for another hiding. One thing that everyone is sure about is that he will have to take measure to stimulate the economy. Although there was a feeling that 2013 could be the year the UK economy gets back on its feet, poor growth figures have proved otherwise and Osborne may have to prove himself magician as well as chancellor.

If the key to economic health Is stimulating business, one key indicator of how the economy could go is how Osborne approaches over-arching tax legislation.

Tax avoidance has been big on the government's agenda with increasing power ad resources being handed to HM Revenue & Customs to help stamp out rule-siding regimes and make sure everyone pays their share.

This includes big businesses and after the furore that was caused by Starbucks, Amazon et al over their sneaky accounting policies, Osborne is sure to want to show these American behemoths who's boss.

Baker Tilly senior tax partner George Bull believes a minimum tax for big business could be introduced that would see companies have to cough up a minimum amount despite reliefs and clever tricks they may use to reduce their profits.

This would be a fantastic vote winner; there's nothing better than seeing the big guys get their comeuppance.

However, where would this leave us globally and economically speaking. Britain is competing in a globalised world where company HQs and offices set up all over the world. Because of this there has been what Bull describes as a 'race to the bottom' when it comes to corporate taxes and enticing companies to set up in your country.

In a global recession, the whole world is fighting for companies to do business in their country where they create jobs and pay taxes.

Will Osborne shoot himself in the foot by standing by his beloved anti-avoidance mantra and adopting an us-against-them mentality when it comes to big business.

Or will he do what's fair and target the big companies that exploit our tax rules an use the money they pay to help give tax breaks to smaller UK entrepreneurs and help kick-start the economy with homegrown businesses.