The trickle of firms renouncing their residency in the UK for tax purposes has now increased to a steady stream after two more companies revealed plans to relocate their corporate HQs offshore.
On Thursday, Charter, the London-based engineering group, announced proposals to change its corporate structure involving the creation of a new holding company in Jersey, to be called Charter International plc, but with its head office and tax residence in the Republic of Ireland. While the company will remain listed on the London Stock Exchange, its new corporate HQ will move to Dublin
The company explained in a statement that the proposed move is motivated by the fact the the vast majority of its operations are conducted abroad, having invested about GBP100mn outside of the UK in Central Europe, China and South America. As a consequence, it says that only 5% of its total sales are represented by customers located in the UK.
The move is seen as further evidence of UK plc's increasing dissatisfaction with the international tax regime compared with jurisdictions such as Ireland, and especially the Treasury's plans to impose tax on foreign profits to discourage multinationals to send profits to low-tax jurisdictions to avoid UK corporate tax.
"The board believes that the implementation of the scheme, with the ultimate parent company being based outside the United Kingdom, will provide a suitable platform on which to develop and expand Charter’s businesses internationally and will lead to a lower overall tax rate and lower tax compliance costs than would be achievable if the ultimate parent company of the Charter Group were to remain in the United Kingdom," the company stated.
Charter believes that tax residence in Ireland brings a number of other benefits, including "a less complex taxation system which does not seek to impose tax on the unremitted profits of subsidiary companies in other jurisdictions."
Meanwhile, Regus, the world's largest provider of services office space, has revealed plans to shift its corporate headquarters from the UK to Luxembourg in what appears to be another tax-related relocation. Like Charter, it has also decided to form a holding company in Jersey.
Regus is another company which conducts a substantial amount of its business outside of the UK, and its chief executive, Mark Dixon, told reporters as he announced the firm's first half results that tax was one reason for the decision to leave the UK.
These announcements have come hot on the heels of news that fund firm Henderson is to defect for tax reasons, capping another bad week for the under-fire government of Prime Minister Gordon Brown which has copped much flak recently over its dithering over tax policy and its desperation to raise new revenues amid a weak economy.
Lloyd's of London insurer Brit Insurance has also confirmed that "it is actively considering the issue of tax domicile."
"Alongside many FTSE companies, Brit Insurance continues to engage with Government in its consultations on tax matters specifically on the future taxation of foreign profits, and more generally on strategies which could lead to a more competitive tax regime for UK headquartered insurance businesses," the company stated in its semi-annual report on Thursday.
Earlier in the year, Shire, the pharmaceutical firm, and United Business Media, both announced plans to redomicile in Ireland..
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