Getting out of the UK
Seems to be very popular for UK companies at the moment. It is important to remember, however, that moving the Head Office to a lower tax jurisdiction does not remove UK activities from the UK tax net. Furthermore, companies whose activities or customers are primarily in the UK are unlikely to want to emigrate, the potential savings could well be outweighed by additional costs.
However, where significant profits arise outside the UK the position should, at least, be considered.
It is, in reality, not difficult (from a tax perspective at least) for companies to move outside the UK at the moment.
For shareholders an exchange of shares in a UK company for shares in a non-UK holding company is unlikely to trigger a tax liability.
Additionally, the sale of non-UK subsidiaries to a new non-UK holding company may qualify for the Substantial Shareholdings Exemption and so, again, be tax free. It seems odd that one of the Government’s policies to enhance the UK’s competitiveness should be used as a means for exit. That’s tax for you!
Date: 14th August, 2008
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