Tax must keep firms in the UK

The London 100 group of executives from Lloyd’s of London has called for tax changes to stop companies moving to offshore locations and to attract businesses to the UK, the FT reports

“Companies operating in this market are very mobile and it is very easy to move large amounts of capital, risks and profits with a single pen stroke on a reinsurance contract,” the group says in its report, prepared with Ernst & Young.

Michael Wade, chairman of the London 100 tax working group, said the UK must change its rule book if it is to succeed in bringing back companies such as Hiscox, Catlin, Brit and Beazley, which respectively have moved their domiciles to Bermuda, The Netherlands and Ireland.

Come to the UK

“But there are also possibilities of attracting other vehicles – such as Axis and Harbour Point – which have not previously been domiciled in London,” he said.

“It is significant that the London reinsurance market is adding its voice in opposing the proposed ‘jobs tax’ of increased national insurance at the very time when there are serious opportunities for growth in this sector for the UK,” he said.

Smooth reinsurance taxes

The proposals include changes to allow reinsurers to smooth the tax impacts of their volatile catastrophe-related profits and losses over time, further amendments to the rules affecting controlled foreign companies and exemptions from taxes applied to profits made by overseas branches.

“Our expectation is that these measures, taken together, will not lead to any significant change in UK corporation tax receipts, may give rise to increased receipts from income tax and national insurance contributions and also bring with them less quantifiable benefits,” the report says.