BusinessCompany NewsRecession tempts more to leave UK

Recession tempts more to leave UK

Experts predict medium-sized companies will seek to redomicile their headquarters offshore as economic climate sores

The UK recession is spawning a new wave of medium-sized companies seeking to
redomicile their headquarters offshore, with the Treasury potentially losing
billions in future tax revenues, according to experts.

Lloyd’s of London insurer
Beazley recently announced
it is relocating to Ireland, where it will benefit from a 12.5% corporate tax
rate, and Brit
Insurance
confirmed it was quitting Britain in favour of Holland.

Barry Spencer-Higgins, principal of
SCF Group, said he has
seen an increase in medium-sized companies with turnovers between £5m and £10m
looking to move abroad.

‘Right now, the UK is not an attractive place for many of these businesses to
be. They can’t afford to be here if they’re to survive,’ he said.

Spencer-Higgins said businesses redomiciling can expect to save between 30%
and 50% on their UK tax obligations. ‘Since the banking crisis we have seen a
significant increase in medium-sized companies considering fiscal migration,’ he
said.

He added as many as 60 clients are considering restructuring their corporate
affairs outside of the UK, resulting in more than £100m being lost to the
Exchequer. ‘If we are representative then the potential loss could run into
billions,’ he said.

Richard Mannion, national tax director at
Smith &
Williamson
, was aware of one company which was making a £20m profit in the
UK and halved its tax bill by relocating abroad. ‘They were doing it to save
money in the downturn. Once a business like that is lost it’s lost long term,’
he said.

A Treasury spokesman said it was ‘fully committed’ to ensuring the UK’s tax
system attracts economic growth and investment from multinational businesses.

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