The tax changes in the 2008 Budget has prompted Guy Hands, the founder of Terra Firma, to warn an offshore move for part of his UK-based private equity group, which owns EMI and the Odeon/UCI cinema chain.

The group is reviewing the expansion of its overseas operations in response to the tax changes, according to The Times.

‘Such trends in UK taxation, making the UK a less competitive financial centre than it was, have caused us to review our UK activities and may result in future growth being pursued through our other European offices,' Hands said in his annual review released yesterday.

‘Taxing long-term capital gains more like annual income will encourage businesses to be less long-term in their approach and will undermine one of the biggest benefits of private equity investment.’

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