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This article was first published on LexisPSL Corporate on 19 March 2014. Click here for a free 24h trial of LexisPSL.

The Budget 2014 for corporate lawyers

19/03/2014 Corporate analysis: With the Chancellor's speech still ringing in our ears, we bring together the most important features of the Budget 2014 for corporate lawyers alongside expert analysis and industry comment.

What was relevant in the Budget for corporate lawyers?

Budget 2014--TIIN: Changes to the taxation of high value UK residential property held by certain non-natural persons, LNB News 19/03/2014 155 An extension is made to the package of taxes which affect residential properties held by companies, partnerships with company members and collective investment schemes (collectively referred to as non-natural persons (NNPs)), other than genuine commercial businesses and other limited categories, to properties worth more than 500,000 up to 2m. Budget 2014--TIIN: Annual investment allowance--Increase to 500,000 for extended temporary period, LNB News 19/03/2014 160 The maximum amount of the annual investment allowance (AIA) will increase to 500,000 from 1 April 2014 for corporation tax and 6 April 2014 for income tax. This will stay in place until 31 December 2015, after this date it will return to 25,000. Budget 2014--TIIN: Venture capital trusts return of capital, LNB News 19/03/2014 166 Venture capital trusts (VCTs) will be prevented from returning share capital to investors within three years of the end of the accounting period in which it issued the shares. The measure, announced in the Budget 2014 applies to shares issued from 6 April 2014 and aims to ensure the tax reliefs offered to investors making VCT investments are well-targeted, so VCTs can continue to operate effectively and provide support to small and medium-sized companies with high-growth potential. It also is intended to ensure investments through the tax-advantaged venture capital schemes continue to support growth, but that tax reliefs operate in a fair and sustainable way.

What does this mean for corporate lawyers?

Steve Edge, partner at Slaughter & May: There was some focus in this budget on tackling domestic avoidance but the public (largely Public Accounts Committee (PAC) driven) furore over corporate taxation and HMRC being 'too close' to big business seems to have abated a little so that the pressure to have announcements about naming and shaming banks, banning tax defaulters from public procurement contracts was not as strong as it had been in previous years. How much impact the OECD driven BEPS project will have on the UK tax environment over the next year or so remains to be seen. There are good things that can be done there but there is also a clear risk of failure through over-ambition.

The other aspect of the peace dividend and re-structuring of our corporate tax regime on to a territorial basis has, of course, been some welcome returns to the UK and also new business arrivals (particularly from the US). It is good to see the government's efforts to be open and responsive to business producing benefits to our economy in this way. A possible blemish on this record, however, might be the proposed limitation on bareboat charter payments in the oil services industry. This seems to have started either as an attack on earnings stripping (or avoidance) or as a contribution expected from those engaged in the North Sea (even though the target was not the producers themselves who enjoy the direct profits from oil) but has now lost its way a little so that the philosophy or justification behind or for the limitation is less easy to discern. Many fear that it is just an extra tax on service suppliers to the North Sea and that its impact will be to affect investment in the very mobile oil services sector. We shall see--but the fact that the government is saying it will review after a year suggests that they have some inner doubts too. Otherwise, this is a 'steady as she goes' budget for UK business with some useful help given to investment and infrastructure. Edward Craft, partner at Wedlake Bell: One of the main points that jumps out to me is the point about stamp duty. 'From midnight tonight anyone purchasing residential property worth over half a million pounds through a corporate envelope will be required to pay 15% stamp duty'--but what does this mean? Interestingly, he said 'anyone purchasing residential property though a corporate envelope' because clearly, on this statement, some company acquisitions of residential property will not be caught because there is no way a pass through can be imputed to an individual.

Are there any surprises?

Steve Edge: This budget contained nothing that was particularly surprising or dramatic in corporate or business tax terms. As was to be expected at this stage of the political cycle, the emphasis was elsewhere. The lack of surprises was perhaps down to a couple of other factors: o the pressure on banks to behave and the tax reforms for UK based multinationals and domestic businesses (most competitive tax regime in the G20 ambition) has produced a peace dividend with less aggressive tax planning to counter and so less pressure on urgent anti-avoidance rules a better relationship with business and a keenness to have a no surprises culture on both sides mean that much of what was announced (partnership and loan relationship changes etc) was detailed and heavily trailed through previous consultations

What actions should corporate lawyers be taking as the dust settles?

Edward Craft: Reflecting on what is of most interest or relevance to corporate lawyers is that it will be even more necessary to ensure that EIS/VCT investments are properly managed to ensure they are compliant throughout the relevant period.

What has been the reaction from the corporate world?

Anthony Browne, chief executive, British Bankers Association: 'Export growth is vital. That's why we have consistently stressed the need for competitive pricing of export finance as well as changes to the system to allow support for businesses in the supply chain. We are pleased that the government has listened and applaud the aim to give the UK one of the most competitive export financing regimes in the world. It takes confidence to become an exporter--this package could be just the nudge many businesses need to compete in markets around the world.'

Want to know more?

A full overview of the Budget 2014 can be found here. The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor.