THE government yesterday moved to reassure multinational firms that there will be no surprise tax changes if Labour wins the next general election, amid growing fears of an exodus of blue-chip firms.
Chancellor Alistair Darling told an audience of chief executives – including GSK boss Andrew Witty, WPP chief Martin Sorrell and the LSE’s Xavier Rolet – that he knew “businesses want certainty on tax”.
He presented delegates at a UK Trade and Investment conference with a tax framework that he said would ensure Britain’s tax regime was “fair and simple”.
And he said the government would ensure that UK tax didn’t impact on commercial decisions, was predictable and had low compliance costs.
But business secretary Lord Mandelson said Labour wouldn’t match a Tory pledge to cut the headline rate of corporation tax – currently 28 per cent – by scrapping allowances.
“Rather than a general, across the piece lowering of corporation tax, firms want to see greater incentives for investment,” he said.
Employers’ group the CBI and the Association of British Insurers gave a cautious welcome to the announcement, although the latter said the government had dragged its heels.
But Neil Neal Todd, senior tax partner at law firm Berwin Leighton Paisner, said: “That the government has felt the need to set out principles that ought always have been at the heart of any well ordered tax code shows how far the UK tax system has been blown off course.”
Diageo is considering leaving British shores for tax reasons, while HSBC, Unilever, BP and Axa have asked the government for clarity on future tax plans. WPP, Shire and UBM have already moved their tax domicile.