The UK offers plenty despite its tax regime

The design and implementation of sustainable corporate tax initiatives
continues to weigh heavily on the government’s ability to stymie the so-called
‘exodus’ of companies seeking more favourable regimes offshore.

Gordon Brown’s regime is now charged with the task of promoting advantages to
business of remaining within the bounds of the UK.

Richard Lambert, director-general of the
CBI,
addressed a corporate tax conference last week arguing the UK tax system remains
competitive, particularly when compared with BRIC domiciles, those of some of
the fastest-growing economies.

Adversely, however, Lambert pointed to the deterioration of the UK’s
competitiveness in relation to other European Union member states. In 1997, the
UK administered the third lowest level of corporate tax among the EU; today, it
imposes the sixth highest rate at 28%.

Despite this, the reputational risk to a business moving operations offshore
is cited as a legitimate concern. Relocating headquarters abroad impacts on a
company’s connection to the community it inhabits, forcing them to re-establish
more intangible aspects of the brand.

According to Ashley Almanza, chief financial officer at
BG
Group, there are ‘many powerful, positive reasons’ supporting a business
decision to either remain or relocate to the UK, particularly London.

‘There’s a good judicial system, infrastructure, plus all the other large
companies are based here. There’s a huge advantage in being in proximate contact
with people you’re making decisions with,’ he said.

The largest concentration of professional services, such as lawyers and
accountants, also gives weight to businesses retaining headquarters within the
UK.

Douglas Flint, group finance director of HSBC, points to the Californian
market in reaffirming the UK as a viable market to undertake business. With one
of the highest corporate rates of tax, the West Coast state is also home to the
highest concentration of entrepreneurs in the world.

Flint argues that despite the inconsistencies in tax administration, the UK
offers considerable advantages in areas of professional services, architecture
and lifestyle. ‘It’s become obvious that making the UK more competitive is
within all our interests… HMRC, Treasury, fiscal groups, business and
taxpayers.’