The United Kingdom Tax system is not neutral with respect to a
Company’s investment and financing decisions, that is incentives
and disincentives to invest in particular projects or use
particular types of financing arise through the imposition of
taxation. Such biases may increase or decrease the value of
capital projects, and if a company is to be certain of making
accurate investment decisions the incremental tax flows arising
due to the project must be included in the evaluation.
The tax flows arising through the acceptance of a project may
differ depending on the company's or group's tax profile, and
therefore the overall tax position of the company or group must
be considered. The thesis explains the legislation relating to
the taxation of corporate groups and suggests that because the
tax system is so complicated, a computerised model is probably
necessary. The author's computerised model is developed and
tested in the thesis, comparing evaluations conducted using the
procedures and assumptions of groups in the surveys, with those
of the simulation model. It is shown that both understatements
and overstatements occur through incorrectly allowing for
taxation.
The results of two empirical surveys are presented. The first,
a postal survey, discusses the methods used by companies to
incorporate tax in their project appraisals, and the second,
based on interviews, provides a review of the whole capital
budgeting process.
Date of Award | 1987 |
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Original language | English |
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Awarding Institution | |
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THE IMPACT OF TAXATION ON THE CAPITAL BUDGETING DECISION OF CORPORATE GROUPS
HODGKINSON, L. (Author). 1987
Student thesis: PhD