UBM set to move tax base to Ireland
Monday 28 April 2008
United Business Media, the global media group, is close to announcing that it will move its tax base to Ireland in a switch likely to prompt a fresh storm of criticism of the Government's taxation of companies with international businesses.
UBM is in the final stages of planning the move and could announce the switch as soon as this week. It already has an office in Dublin, which was set up at the end of last year via a Luxembourg-based company, and recently appointed Alan Gillespie, the chairman of Ulster Bank Group, as a non-executive director. The company, whose assets include the PR Newswire business, an international events concern and a string of media groups around the world, will say it is moving to Ireland because it now earns 85 per cent of its revenues from activities outside the UK.
It is the second major British company to relocate its tax base to Dublin in the space of a month, with Shire Pharmaceuticals unveiling a similar move just two weeks ago.
The announcements come in the context of an ongoing review of how British companies are taxed on profits made by foreign subsidiaries. Ministers have been investigating reforms of the rules on "controlled foreign companies" since the end of 2006 and HM Revenue & Customs is expected to announce firm proposals for reform before the summer.
While the review was prompted by an adverse European Court of Justice on the current tax regime, leading accountants believe the new rules are likely to make the tax affairs of British companies much more complex and that the tax take from controlled foreign companies could rise significantly.
The only details of the reforms in the public domain so far were published in an HMRC discussion document last summer, the substance of which unnerved many accountants specialising in the area. Tim Steel, a corporate tax expert at Ernst & Young, said: "Many taxpayers believe the proposals are far from revenue-neutral and that the [new] rules will result in significantly increased revenues."
However, UBM is believed to be as concerned about the complexity of the new regime as its potential tax bill, a point also made by Shire. British companies are examining Ireland as an alternative tax base because of its geographical proximity, the fact that English is the business language there and because the country's tax rules are considerably more simple.
The CBI has made repeated warnings this year that British companies are considering moving their headquarters elsewhere in the face of concern about taxation. The business group seized on Shire's decision to relocate as evidence of its arguments and is likely to step up its campaign once UBM's move is formally announced.
However, the Treasury has rejected any suggestion that it intends to use its review of foreign controlled companies as an opportunity to increase the tax revenues earned from such businesses. It has promised any reforms would be "revenue neutral".
UBM last night refused to make a comment.
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