Government to back down on tax reforms

The government is to make a U-turn on controversial tax reforms that experts feared would have led to a withdrawal of many companies from the UK market, according to reports in the Financial Times.

According to the paper, the Chancellor of the Exchequer, Alistair Darling, is expected to this week throw in the towel over the issue, following pressure from businesses.

The Treasury is expected to reveal in a reply to a letter from the Confederation of British Industry that proposals to deal with tax avoidance had been dropped.

Instead, government ministers would re-commit to the principle of exempting foreign profits from tax, the FT said.

According to AFX Financial, the controversial plans provoked a backlash from major UK companies, prompting some to relocate their headquarters to Ireland in protest.