GSK CFO and Vodafone's Connors slam UK tax system

Two of the UK's leading accountants have panned the UK's tax system at a meeting to discuss the latest developments on the controversial issue of controlled foreign companies.

Julian Heslop CFO of drugs giant GlaxoSmithKline and John Connors, director of
tax strategy at Vodafone hit out at the broader UK tax framework in a climate
which has seen major companies leave the UK and others threaten to follow suit.

Heslop called for the rate of corporation tax to be slashed to 15% as other jurisdictions looked to poach British- based businesses.

"The world is not standing still.... move corporation tax down to 15%," said Heslop.

"The money we would lose in corporation tax we would more than make up in employment taxes."

Ownership strategies, the way companies decide where they locate themselves, were being considered in the face of continuing uncertainty, said Connors.

"Businesses are looking at their ownership strategies… we have unfortunately seen the transfer of assets [by companies relocating offshore] out of the UK."

"That's not good for British business and that's not good for the UK as a whole."

The finance chiefs were panel members at a high-profile forum yesterday to
discuss the UK's stance on Controlled Foreign Companies, organised by the Oxford University Centre for Business Taxation, which has still not
been finalised after years of wrangles and arduous consultation.

However the Treasury is making efforts to hammer out a compromise by pushing
on the issue with its new CFC discussion document.

The government wants to protect the UK tax base by ensuring there is no artificial diversion of profits out of the UK by stockpiling assets such as intellectual property in an offshore piggy box where there is no genuine economic activity.

Connors whose company is still licking its wounds after losing a £2.2bn CFC case last year added British companies were " disadvantaged" compared to overseas rivals.

He said There were "multinational heroes" overseas who were better able to reduce their effective tax rate. "This has rendered the UK far less competitive and has disadvantaged us compared to our counterparts."

Read the CFC update here