Treasury urged to revisit foreign profits

The move follows the departure of
Shire, the UK’s third
largest pharmaceutical firm, to Ireland for its tax residency, with
United Business
following suit this week.

John Fairley, an international tax adviser with law giant Baker &
McKenzie, who has met the Treasury as a representative of the International
Chambers of Commerce in an earlier stage of the consultation, said: ‘Obviously,
recent developments should have affected the government’s thinking, this is a
real concern for all of us. They need to sit up and pay attention to it.’

Other leading figures consulted on the Treasury’s original discussion
document, released last June, and agreed an urgent meeting was needed. Ian
Brimicombe, tax director for AstraZeneca and a member of the Hundred Group of
Finance Directors’ fiscal committee, said: ‘There must be further interaction to
ensure issues are fully fleshed out prior to the consultation document.’

He said AstraZeneca had already made a representation to Treasury officials
making its opposition on the taxation of passive income clear.

Brimicombe said: ‘We are engaging with them to work through a sensible and
proportional regime which allows the UK to prove itself as a competitive regime
alongside other countries.’

Brimicombe added that the Hundred Group was keen for the UK to remain a
country that large organisations find attractive to invest in and from.

GSK’s outgoing chief executive, Jean-Pierre Garnier, has said that the UK
business environment needed to be ‘realistic and favourable’ to enable
multi-nationals to compete globally.

The Treasury’s discussion document on reforming UK rules for controlled
foreign companies, CFCs, outlined a move to tax passive income ­ such as
dividends, interest, annuities, royalties and rents of overseas subsidiaries.

It has been conducting its consultation on the moves directly with corporate

A Treasury spokesman said: ‘We will continue to discuss with businesses the
way in which the new CFC tax regime can be designed. The principal will be to
increase competitiveness and any proposals will reflect our ongoing discussions
with businesses.’

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