Clause 101 - References to accounting practice and periods of account
Finance Bill
5:45 pm
Mr Howard Flight (Arundel and South Downs, Conservative)
I am glad that the Financial Secretary made it clear that there was no intent to require such non-UK-incorporated companies to use UK GAAP for their accounts. There is clearly an argument about tax fairness in terms of use of UK GAAP for UK tax calculation purposes, but the provision obviously adds to the burdens on businesses that have branches here, because their calculations for UK profits will be different from those for their overall accounts. Therefore, there will be yet more notes in the accounts explaining the differences.
Clearly, in an ideal world, GAAP would be fairly common among at least the developed economies. I wonder whether the Government have considered how much tax materiality there is on the subject. The branch companies are mostly either north American or continental European. If the differences are not that major, is the exactness of the requirement to use UK GAAP for tax purposes worth the bureaucratic hassle?
What discussions have the Government had with the profession? Its representatives have raised the issue broadly with me. The issue is technical, not political, so we would not want to put the amendment to a vote, but I would like a further response from the Financial Secretary on those points.