Saturday, August 30, 2008

Can The Last Company To Leave, Turn Off The Lights.

Having written an article about the new taxation rules from Alastair Darling and how these would see businesses quitting the UK, we now see more and more companies upping sticks and moving to pastures new.

George Osborne Britains Shadow Chancellor wrote in a letter to Alastair Darling that a decision yesterday by serviced office provider Regus to leave the UK is more evidence of the damage done by the confusion caused over the business tax regime.

Mr Osborne added that the changes, combined with 10 years of a Labour Government, had "left us with some of the highest corporate tax rates in the European Union" and called on the Chancellor to fund a cut in the UK rate by simplifying capital allowances.

But Mr Darling dismissed Mr Osborne's accusations out of hand, telling him he was "wrong".

"Surveys by respected international bodies including the World Bank and the World Economic Forum consistently show that the UK is successful at providing a business friendly environment and a competitive tax system," Mr Darling said in his response.

Regus is the third company this week to announce that it is to move abroad because of business taxes. Asset manager Henderson and engineer Charter are moving to Ireland where the tax regime is more business friendly and Regus - whose chief executive Mark Dixon already lives in the tax haven of Monaco - is moving to Luxembourg.

They will follow pharmaceutical group Shire and United Business Media who have already relocated to Ireland this year.

Charter, Regus and Henderson all said concerns about possible changes to Britain's tax regime were a key driver of their decisions to leave. "It is fair to say tax is an important consideration for us and we feel like we are doing the right thing," said Mr Dixon yesterday. "I think certainty of tax is crucial in business and what we want is for there to be no surprises. Luxembourg can offer that." Mr Dixon, who hails from Essex and started life as hot dog salesman, also said Luxembourg offers value for money that London, with sky-high property prices, does not. The Regus boss warned the capital must try harder to keep international businesses.

"London has to face up to the fact that the world has become a lot flatter and is much more competitive than it has ever been. As our business model proves, you can be based almost anywhere these days," he said. Regus shares slipped 1¼ to 74½p, valuing the group at £706m.

Philip Yates, chief executive of Henderson, said earlier this week: "There is too much uncertainty about the long-term structure of the tax regime and the fact that so many other companies are looking at a move is a more eloquent testament to that than anything I could ever say."

Mr Osborne urged Mr Darling to reduce the main corporation tax rate from 28pc to 25pc, and bring about a "permanent simplification of the tax system".

The shadow chancellor concluded: "With companies leaving Britain, weakening an already ailing British economy, I urge you to adopt our proposals in order to restore our competitiveness and help prevent any more companies from deciding to leave the UK."

Mr Darling, however, told Mr Osborne the corporation tax rate remains under review, but added changes must be "consistent with transparent and fair tax policy that protects the sustainability of the public finances".

Good news is that Labour are hanging on to power by the skin of their teeth and, barring David Cameron being found with an orange in his mouth, wearing suspenders and visting 5 hookers dressed like Nazis, he should be in power shortly and we can say au revoir to this disasterous experiment with conservative-socialism.

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