BEPS could cost property industry £660m a year
The introduction of government measures to clamp down on tax avoidance could cost the UK development sector as much as £600m, according to a new study
Plans to restrict the tax deductibility could harm investment in debt-reliant industries, the British Property Federation (BPF) warned.
Despite supporting the initiative, the BPF said it is concerned that the proposals go beyond what is necessary to combat tax avoidance; this could hurt investment and cost the sector £600m based on figures from the 2015 half-year De Montfort study of commercial property lending.
The government has been consulting on implementing the OECD recommendations to make it more difficult for companies to shift profits to low-tax jurisdictions.
The BPF said an increase in the overall cost to real estate borrowers would be likely to lead to a decrease in investment in real estate and could also affect the UK’s global competitiveness as an investment location. Pensioners would also end up with lower returns.
Ion Fletcher, director of policy in finance at the British Property Federation, said, “While we are wholly supportive of the government’s plans to clamp down on tax avoidance, the current proposals go much further than is necessary and are particularly punitive for capital intensive industries like real estate.
“Almost a million jobs around the country rely on sustained investment in commercial and residential property and the proposals put these at risk.”
Fletcher said the government should clamp down on tax avoidance without damaging the prospects of regeneration projects. He recommended that interest payments to unrelated parties should be given full tax relief and the government should wait to see how other OECD countries implement the measures in order not to “end up out of line” and lose competitiveness.
