Laurence Field, Head of Corporate Business at leading national accountancy Crowe Clark Whitehill, comments on what lessEU scrutiny on UK tax could mean.

All EU governments currently have to operate their tax policies in line with EU principles, but a Brexit would take EU scrutiny of UK tax rulings out of the equation. A UK government could be tempted to implement company friendly tax measures to attract more business. On the flip side, as the UK would no longer benefit from the key European tax directives, UK-headquartered companies would be relying on the provisions of the bilateral tax treaties to mitigate taxes on payments of dividends and royalties. This might make the UK a less attractive location from which to base European operations. 

Tax incentives for industry?
Many of the successful targeted tax incentives of the last 10 years have been subject to European State Aid approval, and some argue that the complexity has been driven by the necessity of compliance with EU State Aid provisions, which make the schemes increasingly less useful.A Brexit would remove any restrictions that could be imposed from Brussels on tax incentives for businesses such as the Enterprise Investment Scheme or Venture Capital Trust Scheme. These are all subject to EU controls around how much can be raised and over what period.“It could also lead to the introduction of more generous tax incentives for important industry sectors – although it is difficult to think this government would want to create more generous tax reliefs.” 

No change for tax avoidance
“With all political parties seemingly committed to making companies pay their ‘fair’ share of tax – it seems unlikely that a Brexit would have any impact on the development of the current initiatives.The current government has thrown its weight behind the proposals to improve tax transparency and challenge tax avoidance. Driven by the OECD and the G20, the proposal for the international framework has been under development for many years and the 2016 Budget may see the introduction of some of the initial measures such as country by country reporting.” 

What would happen in practice?
“Not a lot – at least not immediately. Much EU legislation is already incorporated in UK tax law and post Brexit it would be business as usual. “Obviously, in the future, tax law can be amended without regard to EU principles. To date much of the EU direct tax influence has been fairly businesses friendly and it would be difficult to argue that it has been a major constraint on UK direct tax policy.”