A row is threatening to reignite between UK business and the Government as two companies yesterday announced they are leaving domestic shores to slash their tax bills. The British business trade body yesterday warned that there would be more to come if the Government does not act soon.
Charter, the engineering group, and the asset manager Henderson Group announced they are to shift headquarters from the UK to the Republic of Ireland over issues including taxation of foreign profits. This comes a day after Brit Insurance said it was seriously considering quitting the UK.
The news will come as a blow to the Government, which set up a tax reform group in Aprilfollowing the defection of several companies from the UK, to help staunch the flow.
John Cridland, deputy director of the Confederation of British Industry, said: "This is not a surprise, but it's a worry. A number of companies are considering similar moves, and there will be a steady flow of these announcements unless the Government tackles the issue."
Shire Pharmaceuticals and United Business Media saidearlier this year that they plan to quit, while the advertising giant WPP and Smith & Nephew have publicly stated they could leave.
Charter said it had taken the decision to move as its business has become more international and it scaled back its operations in the UK. Michael Foster, head of Charter, said: "It is the legislative framework which we need to provide us with a regime in which we have greater ability and freedom to develop our business more profitably over the long term."
Charter said it had chosen to base its headquarters in Ireland because of that country's less complex tax system, its cheap and available accommodation and staff, its time zone and the language.
Henderson also plans to move its headquarters to Ireland, which will save it £8.5m a year in tax. The group's chief executive, Roger Yates, who shocked the market yesterday by announcing he was to quit the group, said: "This is a valid question for boards to ask: 'Are we domiciled in the best place?' Tax is a really important part of financial management."
Bill Dodwell, head of tax policy at Deloitte, said: "This is not good news for the UK. It puts pressure on the Treasury to come up with a robust package to convince businesses that having their headquarters here is a benefit."
The UK's corporation tax is 28 per cent, one of the lowest in the G7, but pales in comparison with Ireland's 12.5 per cent. The Treasury said the issue is under serious review. "The UK continues to offer one of the most competitive business tax regimes of any major economy, including the lowest headline rate of corporation tax in the G7."
Earlier this year Alistair Darling offered an olive branch to businesses worried about the level of taxation by setting up a high-level working group to address the competitiveness of the corporate tax regime, which has met twice.
Separately, Roger Yates made the surprise announcement he was to leave at the group's half-year results yesterday, to spend more time with his family.Reuse content