High taxation is now the number one concern for European business, according to research carried out by Lloyds of London in conjunction with Ipsos MORI say Harris & Co chartered accountants Northampton
Lloyd’s 2013 Risk Index report, based on a survey of more than 500 senior global business leaders, shows that worries about tax have risen from being sixth on the list two years ago to taking first place, driven by what it terms ‘prolonged public and political exposure and debate’.
Cormac Marum, former inspector of taxes and head of tax advisory at UK200Group member firm Harwood Hutton, said that recent coverage of the Public Accounts Committee’s investigation into the tax affairs of global companies including Apple and Google was partly responsible for the increased level of concern.
‘It’s not surprising that the impact of tax on their business is now the major worry of Global CEOs in the light of the prolonged public debate on tax led from the UK. It’s not about high taxes necessarily. Businesses and individuals want certainty over taxation, just like any other cost. They don’t want tax blowing-up in their face and causing reputational damage.’
As well as taxation, the Lloyds risk report suggests the burden of regulatory interference has become a major concern for European businesses with changing legislation moving up to third place risk, and excessively strict regulation moving up to fifth greatest risk from ninth in 2011.
Lloyd’s chief executive, Richard Ward, warned that companies should ensure that they continued to identify and respond to long-term business risks as well as those currently in the news, saying: ‘With business tax in the spotlight and rising up the political agenda, executives are understandably concerned. Yet the danger is that an emphasis on near-term, operational issues comes at the expense of significant, strategic decisions that have previously exercised business leaders.’
Lloyds research indicates that over the last five years, business leaders have developed a more sophisticated and proportionate approach to risk management. In 2013, across the 50 key risks, those given a higher priority score are also given a higher preparedness score, while risks ranked lower in priority are ranked lower in preparedness.
A company’s state of readiness also depends on it size. In 2009, large and small companies had a more comparable view on priority and preparedness across all risks than in 2013. Now, smaller companies give all risks lower priority (10% below average) compared to larger companies (8% above average).