Blog: Jeremy Hunt will undermine Brexit by surrendering tax rights, warn Tory MPs – The Telegraph

They point out that there was little point withdrawing from the EU if the Government was going to ratify the agreement, brokered last year by the Paris-based Organisation for Economic Co-operation and Development (OECD).

“As a party elected to ensure Britain ‘Takes Back Control’ from the EU, it is remarkable that we should be asked to rush ahead and surrender sovereign tax rights under the OECD initiative, especially while so many questions about the measure remain unaddressed,” they say.

“We are united in our belief that we risk doing damage to the UK’s economic competitiveness by pressing ahead with the current implementation timeline.”

The letter, which is also signed by Greg Smith MP and Stephen Hammond MP, points out that other countries are dragging their feet when it comes to implementing the 15 per cent corporation tax floor.

Ms Patel said MPs are “deeply concerned” that the Chancellor will use the Finance Bill to slip through corporation tax measures, adding: “We are going to cut our nose off to spite our face and hurt our ability to grow the economy and business”.

Blow to competitiveness

The Chancellor has also been warned by leading figures in the insurance industry that pushing ahead with the corporation tax floor of 15 per cent ahead of other countries will have a major impact on the UK’s competitiveness.

It comes as a new analysis forecasts that the UK will miss out on over £50 billion boost to business investment each year if they fail to introduce a “gold standard” replacement to super-deduction.

The research, carried out by the consultancy Oxford Economics for the Confederation of British Industry, found that if the Treasury does not introduce a full expensing regime for businesses, Britain will lose £52 billion per year by 2030/31 of business investment.

The CBI argues that the UK has been “plagued” by low levels of business investment since the pandemic. The group is urging the Government to introduce a permanent mechanism that allows businesses to deduct the full cost of investments from their profits as soon as they spend the money.  

‘Double blow’

Brian McBride, the CBI president, said the “double blow” of the super-deduction expiring and the higher rate of corporation tax coming in “would send a worrying sign about Britain’s status as a place to do business”.  

Under the super-deduction, an emergency measure put in place following the Covid crisis, businesses can cut their tax bill by 130pc of the value of qualifying investment.

Mr Hunt is expected to use next week’s Budget to set out a new capital allowances regime for businesses to offset the rise in corporation tax and the end of the super-deduction measure.

Three former chancellors – Lord Hammond, Kwasi Kwarteng and George Osborne – have warned that pressing ahead with a rise in corporation tax would be a mistake.

Separate analysis by the Centre for Economics and Business Research found that Mr Sunak’s decision to freeze tax thresholds will cost taxpayers £78 billion by 2028.

A Treasury source said:  ”UK sovereignty is not undermined, our corporation tax rate is still the lowest in the G7 and important tax levers that boost investment are not be part of the global minimum rate”.

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