Financial services firm considers quitting UK for Ireland

Fund management firm Henderson renewed fears today of a big business tax exodus from the UK after confirming it was considering moving its tax base to Ireland.

Fund management firm Henderson renewed fears today of a big business tax exodus from the UK after confirming it was considering moving its tax base to Ireland.

The firm is understood to be eyeing the move, which could save it millions of euro a year, as part of its long-term financial planning process.

A spokesman for Henderson declined to outline the reasons for the possible change, but it comes amid concern from a number of British companies about the UK corporate tax burden.

The country’s corporation tax rate is currently 28%, well above the EU average of 24.5% and more than double Ireland’s 12.5% rate, according to accountants Grant Thornton.

Shire, one of Britain’s biggest drugmakers, announced in April plans to move its tax base to Ireland to reduce its tax impact.

Martin Sorrell, chief executive of UK-based advertising giant WPP, has also hinted he may look at moving his head office from London for tax purposes, while drinks giant Diageo has also reportedly been discussing a similar move with Irish officials.

It is thought Henderson, which manages around £59bn (€73bn) worth of assets, would be the first big financial services business to make the change.

Mike Warburton, tax partner at Grant Thornton, told the Daily Telegraph: “I view this with great concern and the Chancellor should be equally concerned”

The firm, whose tax charge was £15m (€18.7m) last year, said today: “In response to a press article published in the UK today, Henderson confirms it is considering a potential change in its tax domicile from the UK to the Republic of Ireland.”

Such a move would involve a “negligible” transfer of the group’s estimated 400 UK staff to Ireland if it went ahead, a spokesman said.

Henderson has been paying around 15% corporation tax in the UK for the past two years thanks to deferred tax losses.

But these have now been used up and the company will have to pay the full 28% rate next year.

British firms’ fears over the existing tax burden mounted this year thanks to a series of changes proposed by the UK's treasury including the taxation of intellectual property rights held overseas.

They could see businesses having to pay hundreds of millions of pounds extra to the treasury as a result. The fears prompted the CBI to call for a “radical overhaul” of the UK tax system.

In May, British Chancellor Alistair Darling launched a multi-national tax forum, bringing together the financial bosses of Britain’s biggest companies to examine the new proposals.

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