Wolseley and moving tax base
Posted by Christie Malry on September 28, 2010 at 9:35 am
AccountingWEB reports that the building supplies firm, Wolseley, is seeking to relocate its tax base to Switzerland because it's sick and tired of the hassle of the UK's Controlled Foreign Company (CFC) regime. Ordinarily only UK companies are subject to UK tax. However the CFC regime seeks to drag foreign companies into the UK tax base by defining them as "controlled" by a UK company.
Wolseley has had enough, and is moving to Switzerland where it can control its foreign subsidiaries without getting messed about. Unsurprisingly enough, Ritchie doesn't like it. After churlishly determining that it isn't "a big deal", he then splutters about how the corporate residency laws must be made more robust so that companies can't just move their residency by changing where the board of directors meet. He wants to see a new test, based on where the majority of the board and senior management work.
He's wrong. As well as the comments by Worstall, which point out the absurdity of the country by country reporting advocate calling for more centralisation of tax, his idea would be incredibly damaging to the UK economy. Let's say that Wolseley can't just hold board meetings in Switzerland to gain Swiss residency. OK then, they really want out of the CFC regime. So they tell all their head office staff that they're relocating to Switzerland. That's possibly 100 high earners who currently pay UK tax and spend money in the UK economy who in future will be paying Swiss tax and spending money in the Swiss economy.
On top of which, future growth will be more likely to accrue to Switzerland rather than here.
Thankfully it's unlikely to ever be adopted by any sane government.
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