The BABC’s Policy Work on Behalf of Its Member Companies: A Summary Overview
On behalf of its 2,500 member companies, the BABC engages actively with Government on a broad range of policy issues to ensure that they take account of our members’ interests as they develop and implement their policies. We maintain an ongoing dialogue with Government on many of these issues, and make direct, formal representations to Government on issues of particular concern.
These issues have recently included: the new UK Bribery Act; restrictions on economic migration; anti-competitive fiscal and regulatory measures; taxation of ‘non-doms’; aviation taxes; free trade and open markets; taxation of foreign profits; electronic filing requirements; and statutory residence testing.
Please see below for more information about these various initiatives.
Economic Migration:
In our response of September, 2011, to the UK’s Border Agency’s consultation on economic migration and settlement in the UK, we highlighted our concerns about the proposed additional limitations to be placed on highly skilled workers coming into the UK. As we had in previous submissions on this issue, we stressed the importance of allowing companies to bring such workers into – and retain them in — the UK; and noted the negative impact on the UK economy and on foreign investment in the UK, if the option to keep certain skilled workers beyond the imposed five year limit was removed. We urged the Government to keep the immigration route for skilled workers flexible and to conduct an economic impact assessment before making any changes that could damage the short and longer term business interests of the UK.
UK Taxation of Non-Domiciles:
In our submission of September, 2011, in response to HM Treasury’s consultation on proposed reforms to the taxation of non-domiciled residents, including notably U.S. citizens, we noted the likely negative impact of these reforms on our member companies and on US investment into the UK, and urged the Government to provide absolute clarity about the tax impact of the proposed reform on the overall tax position of U.S. citizens. We have since received a response from the Treasury clarifying certain issues to our satisfaction and will be following up on other points that still remain uncertain and/or problematic once the current Consultation process is completed.
Statutory Definition of Tax Residence:
In our response to this Consultation, we outlined the importance of the Government’s providing certainty as to which individuals have the status of being resident in the UK for tax purposes and how the regulations will apply in practice for our member companies looking to bring workers into the UK.
UK Bribery Act 2010:
Following widespread concern about the uncertainties surrounding the Bribery Act 2010, we wrote to the Lord Chancellor and Secretary of State for Justice in February 2011, stressing that the as-yet-to-be-published Guidance on the application of the Act must clarify a range of issues e.g. from what exactly are considered to be ‚adequate procedures‛ companies must take to prevent bribery to exactly what are acceptable levels of corporate hospitality. The Lord Chancellor responded to our representations, and we were subsequently pleased that the government took account of our concerns on the ‘adequate procedures’ issue, the transatlantic differences on the treatment of facilitation payments and on acceptable levels of corporate hospitality. However, we still remain concerned about certain aspects of the Act and will continue to monitor its practical impact on our member companies with a view to possible further representations on this issue.
Economic Migration:
In September, 2010, we responded to the British Government’s invitation to comment on their proposals to limit non-EU migration into the UK by submitting a detailed paper outlining our concerns: namely, that these proposals, and in particular any restrictions on intra-company transfers, would be very damaging to the interests of our member companies and to the UK’s reputation as an investment location, and reinforce the view that the British Government no longer fully understood the needs of business or the demands of a competitive global market. In November, the Government announced its decision to exclude intra-company transfers from the cap, as we had argued, albeit subject to a minimum salary requirement of £40,000 and maximum stay of five years; but to reduce the number of other skilled workers allowed into the UK from outside the EU by 6,300 (less than we had feared, but more than we would have liked) to 21,700. In our response, we welcomed the Government’s acceptance of our argument on intra-company transfers. But we noted with regret the new salary and term restrictions, and the reduction in the number of other non-EU skilled workers allowed into the UK, and undertook to monitor the experience of our member companies as these new rules are implemented and to continue to represent their views to government on any resulting impediments to the conduct of their business in the UK.
UK-US Defence Trade Cooperation Treaty:
Having actively promoted the progress of this important Treaty since it was submitted to the US Senate in 2008 following its ratification in the UK Parliament, we were delighted to welcome the Senate’s approval of the Treaty in September, 2010. The Treaty will greatly help UK and US companies looking to sell equipment and services to the armed forces of the other county, as well as greatly facilitating defense cooperation between the UK and US.
Fiscal and Regulatory Policy:
In March 2010, we wrote to The Chancellor of the Exchequer and the relevant shadow ministers in the Conservative and Liberal Democrat parties, expressing our members’ concerns about the impact of recent fiscal and regulatory changes on their business interests, and also on perceptions of the UK as an investment location and therefore on likely future levels of foreign and domestic investment in the UK. The issues highlighted in the letter included: the non-domicile tax; intra-company personnel transfers; taxation of foreign profits; and increased income tax rates. We continue to register our member companies’ concerns regarding these measures and endeavor to identify any new policies that could be damaging to the competitiveness of the UK and its ability to attract inward investment.
Immigration:
We are pleased to report that in early 2010, the UK Government accepted all of the Migration Advisory Committee’s (MAC) recommendations for change to the UK’s immigration legislation, including two specific proposals that we had urged the MAC to adopt that will make it easier for UK and foreign companies to bring qualified employees into the UK. These measures provide for the admission of employees with overseas qualifications in fields such as Law and Accountancy, and with Bachelor’s degrees provided that their previous earnings meet the required level.
Aviation Duty:
We noted with concern that the British Government plans continuing with an element of Air Passenger Duty (APD) once the aviation sector in the UK joins the EU Emissions Trading Scheme (ETS) in 2012. We will continue to register our concerns about the negative impact the UK’s uncompetitive aviation taxes will have on the business community, on the tourism and aviation industries, and on inward investment into the UK and urge the UK government to abandon the tax, in line with our European counterparts, once the ETS comes into force.
Taxation of Foreign Profits:
Following our earlier (partially successful) representations to the British Government in response to its consultation paper on the Taxation of Foreign Profits of Companies in the UK in 2008, we made further representations in 2009 about the negative impact of the proposed worldwide debt cap, since this would encourage tax bills for the cash-rich with no equivalent penalty for those with higher levels of debt. We were therefore disappointed that the government decided to proceed with the debt cap, albeit with a delayed implementation date.
G20 and the Preservation of Open Markets:
In March 2009, we wrote to the Chancellor of the Exchequer outlining our hopes for the outcome of the G20 Summit held in London from 2 April. We are pleased the Communiqués from the G20.
Summit in both London and Pittsburgh included satisfactory pledges to fight protectionism and to conclude the Doha Round, but recognize that the implementation of a globally coordinated approach will be a much greater challenge.
E-filing of US Tax Returns:
In response to concerns expressed by our US members, we made representations to the IRS about the new e-filing system for US tax returns, including issues such as software incompatibility. Following a series of meeting and discussions we are therefore pleased that our proposed improvements to the system highlighted in the letter have been registered and subsequently addressed by the IRS.
UK Taxation of Non-Domiciles:
In response to proposed changes to the taxation of non-domicile residents, including notably U.S Citizens, we made strong representations to the Chancellor of the Exchequer, detailing our concerns about the impact of these measures on many of our member companies, and also on the attractiveness of the UK as a desirable location to conduct business. Following extensive meetings with the Finance Secretary and senior Treasury officials, we were pleased that our representations resulted in some positive changes to the proposals.
