Financial Director's Budget Update

FDs of large companies are to be given a new statutory duty to personally certify that there are adequate systems in place to perform correct tax calculations. This responsibility will be given to “senior accounting officers” who will themselves face a £5,000 fine if they get it wrong. The new law is based on the internal controls sections of the US Sarbanes-Oxley Act.
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Capital allowances are to double from 20% to 40% for one year. The move is intended to encourage businesses to bring forward their investment plans, but has been criticised for failing to address the problem that businesses don’t have the necessary finance in the first place. The loss carry-back provisions have been extended for a further year.

The Chancellor laid the groundwork for legislation that would make it possible to change the rate of VAT for less than 12 months, sparking concerns that he intends to raise VAT sharply after the next election.

The economy is expected to return to growth by the end of 2009, but to record a fall of 3.5% for the year overall. In 2010, the Treasury forecasts growth of 1.25%.

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