The fear is not that the UK suffers an exodus of British companies, but that a large minority of the biggest will leave to cut their tax burden.
Sarah Lane, at KPMG, knew of several looking to relocate. “Ireland is promoting itself very successfully as business friendly. They have a low headline rate and they’ve taken down the rate for taxing foreign income.
“In western Europe, there is a sense that the UK no longer has the edge it did.”
The Chartered Institute of Taxation, said: “The UK isn’t necessarily getting worse, although there are one or two factors, it’s that we are in a competitive environment and we’ve got to work to adapt and to attract companies.”
The CBI has warned repeatedly this year that its larger members are considering moving headquarters abroad because of changes to UK tax. Richard Lambert, director-general, said yesterday: “Firms are seriously concerned about the high level and rising complexity of taxation in the UK and are increasingly prepared to vote with their feet. The Treasury cannot ignore this issue or argue that companies are crying wolf.”
However, leaving the UK is not an option for many companies, according to David Frost, director-general of the British Chambers of Commerce. “The vast majority of firms are firmly embedded in their local communities and will not want to up sticks and move despite the high levels of corporate tax,” he said.
The problem is that tax used to be one of the UK’s competitive advantages when trying to attract inward investors, according to Graeme Leach, chief economist at the Institute of Directors. “When you fall down the league on your strong area, then your weaknesses are highlighted, like education and transport infrastructure.”