BUSINESS groups last night gave a qualified welcome to proposals to bolster companies’ relationships with the tax authorities that will be confirmed today by Gordon Brown.

Against a backdrop of increasingly fraught relationships between Revenue & Customs and big business, the Chancellor will accept the conclusions of a review by Sir David Varney into how these can be enhanced.

A report by Sir David, the former executive chairman of Revenue & Customs, will set out plans designed to foster greater clarity, certainty, speed and confidence in companies’ dealings with the Revenue.

A key plank of the plan will be an arrangement for large businesses to be able to obtain a guaranteed advance ruling from the tax authorities on significant strategic plans or projects before they are implemented. These agreements will be legally enforceable.

At present, companies can obtain guidance from the Revenue on the tax treatment of key plans or projects, but tax officials are able subsequently to take a different view. The Treasury hopes that the greater certainty offered by the new, advance agreements will help to encourage investment by both large domestic and international business groups.

Revenue & Customs is to offer a guarantee that it will in future provide a binding view on the tax implications of significant business transactions within 28 days — a rule that at present applies to only a limited class of business activities.

The Treasury is to consult on the Varney proposals in detail at the time of the spring Budget, with the changes to be in place by the end of 2007.

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