The rumours surfaced after the departure of three key managers from his Manchester call centre which sells fixed line telephone services under the brandname Homecall. Citing a "lack of focus" in the group which had subsequently led to "operational difficulties," managing director Keith Basnett, financial director Michael Hughes and commercial director Richard Raper all quit within 24 hours of one another. Whether they jumped or were pushed is not entirely clear. However, Caudwell, who reportedly has a reputation for his no-nonsense management approach, denied sacking the men.

According to the Manchester Evening News, there had also been heated boardroom discussions over a plan to re-register the company in Madeira as part of a cost-cutting drive. However, Caudwell has rebuffed the suggestion, telling the MEN that: "We are not doing anything over Madeira or anywhere else at the moment."

Madeira is part of Portugal and is fully integrated into the European Union. However, a number of special local regimes which are accepted by the EU combine to make Madeira a particularly advantageous location for many types of company with business activities in the EU.

The rate of corporate income tax in Portugal (and Madeira) effective from 2004 is 25%, plus a municipal surcharge of 10%, giving an effective rate of 27.5%.

However, most offshore activity in Madeira takes place in and around the International Business Centre (IBC), which comprises the Free Trade Zone, and its associated services, together with financial institutions and the Shipping Registry.

Income earned by a Mixed Holding Company licensed under the Free Trade Zone Legislation from trading activities (other than through the holding of shares) is exempt from corporation tax until the year 2011. Capital gains tax of 36% is payable by a Madeira Holding Company on the profitable sale of shares in a company in which it has a participating shareholding.

Furthermore, Portugal has nearly 40 double tax treaties, and these can be used alongside the International Business Centre to obtain a very low tax burden for many types of trading and commercial activity.