McDermott Comment | CBI Head Warns Sunak of Further Backlash Over Corporate Tax Rises


Sarah Gabbai, attorney at law firm McDermott Wil & Emery, said:

“The new Health and Social Care Levy, coupled with the upcoming increase in the rate of corporation tax, will be a double whammy for corporate employers and contractor-hirers going forward. Not only are they likely to have a deterrent effect on inward investment into the UK going forward, but could also discourage economic migration to the UK, since the incidence of taxation will ultimately hit employees in the form of lower wage growth due to increased taxation costs for the business.         

In addition, we are already seeing freelance workers and contractors becoming inadvertently involved in non-compliant umbrella company arrangements whose main objective is to avoid employer’s NICs. The new HSC levy will merely make this problem even worse, and thus make the contractor hiring process even more risky. More specifically, it could lead to businesses becoming involved in the facilitation of NICs avoidance or even fraud, unless proper prevention procedures are put in place. Companies and partnerships will need to be mindful of this increased risk and make sure they have suitable procedures in place, as we could well see HMRC stepping up its investigations in this area in the coming months.”

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