The OECD issued one of its periodic appraisals of the UK yesterday. Robert Palmer of Tax Justice UK has summarised some of the tax content in a Twitter thread and I think it important to note another international organisation criticising the UK, but don't have the time to do a post myself I am posting his thread instead. It may highlight slightly different issues from those I would have picked, and I would argue with some of the OECD comments a bit more, but overall it's good. Links are in the original thread, here:
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The comment on the tax breaks for debt financing seems to be based on research from 2017 and earlier, so won’t include the effect of the corporate interest restriction. Has the CIR had any impact on how much companies are loaded with debt?
Answer: I don’t know…
BPR is of course entirely logical. A business may be worth (say) £5m as a trading entity but the chances of any beneficiary having £2m laying around to pay IHT are remote. BPR enables the business to carry on trading, carry on paying taxes, carry on employing people. The only way anyone could find that sort of money would be to sell the business or close it down and sell off the assets. There are countless examples of fine family run businesses that have been passed down through many generations. A change would stop that tradition dead in its tracks. If you know of any such businesses in your local area, don’t forget to pop in and tell them how awful it is that they’ve been able to continue their family tradition because of a ‘loophole’.
If you’d had a bit more business gumption you might have had a business worth handing down yourself. Just because you haven’t doesn’t mean you should ruin things for those have.
The business can be sold
The evidence is that this is almost always good for it
Many small business’s don’t survive the death or retirement of the founder.
I suggest that what is needed is an attempt to develop some sort of ‘after market’ for business’s, however saddling the new business with the acquisition costs may mean it isnt viable.
The French developed Employee Share Ownership as a possible option & I note that in Germany Bosch & Rentjes (Marine Gearboxes etc) are owned by charitable trusts.