AIN has not yet gone far enough to lure WPP back to London, Sir Martin Sorrell told City A.M. yesterday.
Chancellor George Osborne has staked a large part of his business-friendly credentials on Sir Martin’s signal that his marketing firm WPP will come home in light of reforms to UK taxes on profits made abroad.
The Treasury unveiled a big loosening of the tax regime in its draft finance bill yesterday, but Sir Martin says further progress is needed.
“We’re still studying the document,” he said. “It does not go as far as we thought it might... It’s very much in the right direction but not quite far enough in our case. We’re assessing what more needs to be done and the Treasury is being very responsive.”
Osborne has his work cut out. The Treasury has been reviewing the controlled foreign companies (CFC) regime, which taxes overseas earnings, for four years and wants to have final proposals in March.
But the target leaves him scrambling, say experts. “It is hard to see how much further they can go without people being able to drive a coach and horses through,” said Baker Tilly tax partner Kevin Phillips. “They’re running out of time to do much more.”
City A.M. understands that the Treasury is mulling an even more generous regime. It is likely to limit the scope of any tax still chargeable on firms’ overseas financing profits, having already loosened the rules. The Treasury said it has had positive feedback from businesses.