Britain should consider competing with tax havens because to beat them at their own game would be more constructive than trying to eliminate their use, according to the Institute of Directors.

The UK should relax tax rules for certain types of business – such as hedge funds – that find low-tax jurisdictions especially attractive, it says in a new paper. “If the UK’s tax rules were amended, hedge fund assets could be held in the UK, with no overall loss and some gain to the exchequer.”