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Eversheds comment: Budget 2016 - rushing to introduce a cap on tax relief on interest on debt payments could hurt UK economy

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    Commenting on potential taxation measures to be announced at today's Budget, Ben Jones, partner and tax expert at law firm Eversheds, says:

    “It is expected today's Budget will provide further details on the Government’s proposals to cap tax relief for interest paid on debt. This initiative arises from the wider international efforts to curtail profit shifting, but there is a risk that the current state of the public finances will accelerate the implementation of these revenue generating proposals.

    "Businesses will be hoping the Government won't rush the introduction of this cap. It would represent a significant change to the taxation of debt in the UK and would have wide reaching implications for businesses operating in the UK. There remain a large number of fundamental issues to resolve with the scope and effect of the proposed provisions, and we trust the Government will take the necessary time to consult with business on the exact form of these rules. Rushing this change could have a material impact on the UK economy that outweighs the short-term revenue generated.”


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