CITY broker Collins Stewart has sounded alarm bells over insurers Brit and Beazley, after it emerged that the tax man will watch like a hawk companies moving abroad for tax reasons. <br /><br />Ben Cohen, an analyst at the brokerage, has labelled the stocks as “higher risk” because HM Revenue & Customs (HMRC) is expected to subject firms that shift to tax havens to years of scrutiny.<br /><br />The warning, which appeared in a research note issued yesterday, will raise fears the Lloyd’s of London insurance market, on which the firms operate, could suffer under a clampdown on tax exiling. <br /><br />Cohen said Beazley’s decision to move its incorporation to Jersey and its tax residence to Ireland – which he had predicted would net it a tax reduction of 16 per cent in 2009 – puts it in the firing line.<br /><br />Brit may also come under tough scrutiny as it is in the process of moving its domicile to Netherlands.<br /><br />Cohen said insurers Catlin and Hiscox are Bermuda-domiciled and their top managers reside in the UK, but they have not pushed for tax cuts as aggressively as have Brit and Beazley. This makes them only “medium risk”, he said.<br /><br />Amlin and Novae have not shifted their domicile abroad, making them “low risk” he said.Lancashire is incorporated in Bermuda but senior bosses live on the island, making it also low risk. <br /><br />Cohen’s concerns come hot-on-the heels of comments from a senior official at HMRevenue &Customs who said there will be an onus on firms to prove that they have genuinely relocated. <br /><br />Permanent secretary Dave Hartnett has warned companies who are leaving the UK for tax reasons that they could face a challenge several years after they have relocated. <br /><br />He has warned that even if board meetings are held abroad, a company could be forced to provide evidence – including emails and diaries – to prove that key decisions were not taken in the UK.