But will the UK’s tax and regulation laws force entrepreneurs to do the same? Yes, says David Kilshaw, partner at KPMG. “You start losing the big guys and then the entrepreneurs have to follow,” he says. “Industries like hedge funds tend to colonise. In London they are mostly based in Mayfair, if one moves to Switzerland then others will follow.”
Its not just the increase in the income tax rate to 50 per cent that entrepreneurs are finding onerous, Kilshaw says the UK fails when it comes to sponsoring new ventures: “The UK is not good at giving tax breaks and that is what entrepreneurs need to get going.”
One City entrepreneur who owns an online business says that if tax rates rise even more then he may consider moving it overseas, because it is easy to relocate. “We don’t want to leave the UK because it’s where we built our business,” he says, “but we are keeping a watching brief. Capital gains tax really matters to us. So far that hasn’t changed, but if it were to rise sharply, say to the level of income tax, then we might have to consider a move.”
But London has its benefits. Not least its timezone. Kilshaw says: “You can work Asian and US hours from here and, for our clients, that is one of London’s big selling points.”
Jerome Lussan, founder of hedge fund consultant Laven Partners, says that small businesses actually want the high standard of regulation London offers: “Start-ups that we have been talking to have said they want to be well-regulated.”
Don’t undervalue the importance of iconic entrepreneurs who are based in the UK either, says Kilshaw: “For example Richard Branson, having people like him support the UK and liaise with the government is a good thing. But we need government to listen to these figures so they can understand the needs of entrepreneurs and draft the right legislation.”
If entrepreneurs decide to leave the UK for more tax and regulation-friendly regimes, then Tony Cohen, head of entrepreneurial business at Deloitte, says there are some steps to take before you go: “Understanding local culture and language, and whether or not you have a good network of contacts, should be factored into your decision.
“If you plan to work with someone locally, then it is always wise to conduct due diligence to protect valuable intellectual property that you may bring to the business relationship.”