RSS feedsTax experts at Ernst & Young have panned Alistair Darling's reasoning for not consulting businesses before imposing his controversial CGT reforms.
The chancellor faced intense questioning at a Treasury Select Committee meeting yesterday in which he said that the taper relief withdrawal was simply a change in the tax rate, not a change in the tax system.
E& Y's tax boss Chris Sanger said: 'The abolition in the taper represents a significant change in the tax base, in that it moves from distinguishing between business and non-business assets, and therefore it is hard to see how this can represent merely a change in rate. Under the government's approach, there would therefore be a strong case for consultation over these proposals.'
Sanger added: 'The Treasury Select Committee was also surprised by the theoretical cash cost of taper relief, which has been estimated by the government for this year to be £6.3bn. At first glance, this seems high, particularly when compared to the cost when taper was first introduced in 1998, when it was estimated to cost only £70m for business assets.'
'However, this only represents the theoretic extra revenue that would have been received if those same gains had been made if the tax rate was 40%. Hence this theoretical figure does not represent the tax that would actually have been received by the Exchequer if the taper had not been introduced.
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