WPP endorsed the coalition’s changes to overseas tax rules yesterday by moving its base back to Britain – but the advertising giant’s chief executive Sir Martin Sorrell voiced concerns about other parts of the tax regime.
Sorrell told City A.M. the delays to WPP’s return after four years based in Ireland were because “it’s taken the government that long to enact the legislation on overseas earnings… now everything is hunky dory.”
The coalition has removed the possibility of double taxation on multinational firms’ overseas earnings.
While Sorrell stopped short of backing Nick Clegg’s call for an emergency tax on Britain’s wealthiest residents, describing it as “woolly”, he added: “The government reduced the marginal income tax and I have said it was the wrong time for that... If they want to stimulate entrepreneurs, they should tinker with capital gains tax.”
The world’s biggest advertising firm will put its plans to investors in December. The move will not involve big operational changes, Sorrell said, and the firm expects to incur no extra tax burden from the relocation during this parliament.
Chancellor George Osborne welcomed the news: “International companies used to leave Britain. Now they are coming here because we have made this country, with its tax system, a competitive place to do business.”
The announcement was marred by a disappointing set of first half results, prompting WPP to cut its revenue growth guidance for the year from four per cent to 3.5 per cent.
First half revenues rose 5.5 per cent to £4.97bn, with solid growth in the UK offset by clients cutting spending in Europe and the US. Pre-tax profits rose seven per cent to £358m.