Tax investigators are set to issue a series of challenges to global companies who claimed to have relocated headquarters out of Britain to minimise tax bills. Senior officials from Her Majesty's Revenue & Customs (HMRC) are preparing to trawl through senior executives' emails and other records to establish whether moves abroad to jurisdictions such as Ireland and Switzerland are genuine.
In the past three years a number of firms, including advertising firm WPPand finance institution Henderson Global Investors, have moved their headquarters overseas, citing the UK's uncompetitive tax laws. Both companies left Britain for Ireland, although earlier this year the Guardian's tax gap series suggested a tiny number of staff had relocated. If companies are found not to have moved high-level staff in appropriate numbers, firms may be levied fines and forced to pay back tens of millions of pounds in tax.
A senior HMRC source said: "We will be looking for substantial evidence that a move has taken place and is genuine. We will want to see emails to establish there has been a physical relocation and that the brains of the company has moved."
The Revenue, I know, are confident they can win these cases. Not all agree:
But a group tax director of a firm which left the UK for Ireland said the decision to take up residency for tax purposes in Dublin was made on the basis of what he believed was watertight advice given by one of the big four accountancy firms. He added that most of his company's directors were not British and that many of the company's board meetings were held overseas.
To which the reply is simple: that’s game playing; a game of course approved by the Tories:
Michael Spencer, the boss of ICAP and Conservative party treasurer, yesterday became the latest to threaten that he might move his company to another jurisdiction if Labour were to retain power and continue raising levels of taxation.
But not by others:
“Time and again stories in the press talk about people and companies planning to leave the UK because of tax," said forensic accountant Richard Murphy. "The reality is that this is not easy because most who want to leave for tax also want to enjoy the continuing benefit of trading or having accommodation and their family here and the Revenue are rightly making it as hard as possible to get the benefits that trading and living in the UK economy offers while not make a contribution in tax to our collective wellbeing."
Yes that is me. And I believe that the revenue is right to make it as tough as possible fro those who are game playing UK tax rules. The stakes are high but let’s be clear, if there were Anti-Social Behaviour Orders (ASBOs) granted for corporate abuse rather than for kids abuse of neighbours then those who have claimed to be leaving the UK would be high on my list of nominees to get them – because they too are abusing their neighbours by not paying their taxes where I think they really fall due.