The Tories have added to the gathering storm around corporation tax that is threatening to engulf the Treasury, slamming government policy as the third company in two days announced it was to leave the UK to cut its bills.
The shadow Chancellor, George Osborne, sent a letter to the Chancellor, Alistair Darling, yesterday, blaming the Government for the forthcoming departure of Regus Group, the office space company, after similar announcements by Henderson Group and Charter on Thursday.
Regus said yesterday that it proposes to overhaul its structure, moving its headquarters from the UK to Luxembourg. It said the move was designed to protect its tax position "given the ongoing uncertainty surrounding the UK tax treatment of international groups whose holding company is UK-tax resident". The group added the move would allow it to reduce its overall tax rate.
The issue that has prom-pted predominantly mid-tier companies to up sticks relates to the Government's taxation of profits generated by subsidiaries outside the UK. Mr Osborne said in his letter: "It is further evidence of the damage done to the UK by the confusion you have caused in the last year over the future of our business tax regime."
He called on the Government to overhaul corporation tax before the pre-Budget report in the autumn. The Conservatives propose reducing the tax rate from 28 per cent to 25 per cent, paid for by simplifying capital allowances. Mr Osborne went on to urge further reforms to the tax system.
Treasury insiders said Mr Osborne's move "was not a free lunch". One added that reducing corporation tax by 3 percentage points was unlikely to make a difference as it would not compete with Ireland's rate of 12.5 per cent.
The decision by Regus comes after Henderson and Charter said they would relocate to the Republic of Ireland. Shire Pharmaceuticals and United Business Media said earlier this year that they were preparing to relocate from Britain.Reuse content