British businesses consider offshore relocation

Businesses Pondering

An official report commissioned by HMRC has discovered that one in five, around 20 percent, of big British businesses have considered a foreign relocation to avoid the current tax regime.

The report was compiled by TNS-BMRB, who found that businesses were growing disillusioned by the increasing amount of red-tape. Leading accountants UHY Hacker Young analysed the report and reached a conclusion that businesses were ultimately disappointed with HMRC and its apparent lack of transparency.

Roy Maugham, a senior partner at UHY Hacker Young, spoke to The Telegraph of the impact that such departures would have on the government and the economy: “If only a small fraction of those companies that have considered relocating did relocate abroad it would decimate the UK's tax revenues. Whilst the Treasury might feel that deficit reduction means it cannot cut business taxes too quickly there is also a risk to the UK's finances from having a tax system that is uncompetitive compared to places like Ireland. UK companies feel that they are the goose that has been well and truly plucked by HMRC and the Treasury.”

The report was originally commissioned during the Labour Party’s tenure, and since then the Coalition Government has attempted to reassure British companies by declaring that “Britain is open for business”.

The Government has sought to alleviate concerns, yesterday the Treasury issued a statement: “The Chancellor has said he wants Britain to be open for business and for the private sector to drive the UK's economic recovery. That is why the June Budget announced a cut in corporation tax for a million businesses, a national insurance holiday for start-ups and a new office of tax simplification to make the UK a more attractive and simpler place to do business.”

According to UHY Hacker Young 30 percent of businesses feel that HMRC’s tax systems are too restrictive and actually reduce competition amongst UK businesses. The amount of businesses who were satisfied with HMRC was 36 percent, which is 13 percent less than in 2008.

Mr Maugham, added: “This is a poor result as you would expect that HMRC would want to provide large companies with a blue-ribboned treatment. However, these results show businesses are increasingly dissatisfied with the way the tax system and HMRC is working.”