Bob Lyddon said the Chancellor would be far better going after digital technology firms which have their European headquarters in Dublin and Luxembourg instead. In his statement, scheduled for March 3, Mr Sunak is widely expected to increase corporation tax from 19 percent – with the potential for them to increase to 23 percent.
Such a move, amounting to one penny in the pound, would raise £3billion this year – money which will be used to help plug the gap in the Government budget caused by the coronavirus pandemic.
However, Mr Lyddon, the founder of Lyddon Consulting Services Ltd, suggested Mr Sunak would be making a grave mistake.
He told Express.co.uk: “It is a cop-out thing to do, as well as being risky.
“It is risky because he does not know how profitable businesses will be: 23 percent of nothing is still nothing.
“Secondly it is unfair on normal businesses compared to the profit-shifting internet giants.”
It was vital that there was a level playing field in respect of what the tax base of particular businesses was, and an end to “artificial shifting-around of profits to make the tax base appear in the jurisdiction where the rate of tax is lower”, Mr Lyddon stressed.
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He added: “Without that Sunak simply will not raise enough.
“It is a cop-out because it perpetuates the delusion that the Government can shower riches on individuals and they never have to share the pain.
“He ought to freeze personal allowances while making sure that entrepreneurs can retain some incentive.”
Referring to anti-avoidance tax legislation designed to tax disguised employment at a rate similar to employment, Mr Lyddon said: “I have no real problem with IR35 and the elimination of artificial self-employment, but a level of tax support for real self-employment and starting up small businesses needs to be retained and probably expanded if IR35 is to become ubiquitous.”
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He urged the Government to reverse several changes implemented by former Chancellors Philip Hammond and George Osborne including:
- The limitation of lifetime Entrepreneurs CGT Allowance to £1million
- Entrepreneurs CGT Allowance only being available on a company sale, not a voluntary liquidation
- The limitation to £2,000 that can be taken out of a company as a dividend without extra personal tax of 7.5 percent: the profits out of which the dividend is paid had already been taxed at 19 percent
Mr Lyddon concluded: “If corporation tax goes up to 23 percent, there is absolutely no justification for 7.5 percent extra personal tax on a dividend that was already taxed at 23 percent.”
Speaking yesterday, Ben Habib, the property developer and former Brexit Party MEP, told Express.co.uk: “This is barmy. Increasing corporation tax – a tax on profits – will be like seeking to get blood out of a stone.
“The private sector has just suffered the biggest demand shock in its history with large swathes having been forcibly closed for the last 12 months.
“No amount of tax increases, of any kind, will assist the Exchequer in balancing the books.”
The Government spent £280billion last year on measures to fight COVID-19 and its impact on the economy.
Prime Minister Boris Johnson today unveiled his “roadmap” for taking Britain out of lockdown.