MOVING PRUDENTIAL’S headquarters out of London would have little impact on the Treasury’s tax take, according to a senior tax advisor.
Despite Prudential considering moving out of its London headquarters due to concern over new capital requirement rules, Deloitte head of tax policy Bill Dodwell said a move would be unlikely to harm UK tax receipts.
“There will be a modest change, but I doubt it would change significantly,” said Dodwell.
If Prudential moved, then the Treasury would lose out on the stamp duty reserve tax on the trading of its shares. A smaller UK operation would impact on PAYE, as well as some VAT and business rates.
However the cost of running the UK head office, which tends to make a loss and is offset against profits, would lessen. If Prudential borrow in the UK to make an overseas transaction, then the interest cost can also be offset against tax. However, it is unclear whether such transactions have taken place.
The biggest impact on the UK would be non-tax related, Dodwell added. Instead, the economic drain from the HQ not buying UK services and products would have the biggest negative effect.
Prudential’s underlying tax rate on profits for 2010 was 21%.
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