Taxation: Private Companies

Lord Harrison
asked Her Majesty's Government:

Whether they have made an assessment of the report published in July by PricewaterhouseCoopers, Enterprise in the United Kingdom: Impact of the United Kingdom Tax Regime for Private Companies; and, in particular, whether they have analysed its findings that awareness of tax incentives and reliefs are low and that only 25 per cent of small and medium-sized enterprises are aware of government schemes permitting capital allowance relief on energy-saving technologies or contaminated land relief. [HL136]

Lord McKenzie of Luton
The Government have noted PricewaterhouseCoopers’s July 2006 report and that 45 per cent of the companies surveyed were aware of the enhanced capital allowances on energy-saving technologies, the flat conversion allowance and land remediation relief. Enterprise is a critical ingredient of a flexible, modern economy. The Government are committed to ensuring a competitive and accessible tax environment to facilitate the creation and growth of new firms, promoting the exploitation of new ideas and opportunities, and enhancing competition.

The Government note that the population of businesses surveyed for the study was limited to private companies. By focusing solely on private companies, the report excluded a large population of companies and investors that may be eligible for the tax reliefs. A number of reliefs included in the survey are specifically aimed at external investors rather than businesses. In addition, a number of companies surveyed by PricewaterhouseCoopers also would not be eligible for the featured reliefs on grounds of company size. Therefore, the Government's assessment is that, although the report is a useful contribution to the debate on how best to support business and the importance of awareness, it would be unwise to draw specific conclusions from it.

Research has shown that government initiatives often take time to get into the decision-making processes of companies. HM Revenue and Customs uses a variety of approaches to raise awareness of tax issues, including information packs, online information, press coverage, simplified guides, media advertising and working with business support services and other external groups—for example, the “Working Together” initiative. The promotion of government initiatives is also often delivered in partnership with other government departments and external stakeholders, including business representative organisations such as the British Chambers of Commerce.