Dozens of US companies have decided not to invest in the UK over Jeremy Hunt’s insistence on budgeting taxes this month, KPMG warned.
The head of the company’s UK tax department claims the perception that Britain is not ‘firing on all cylinders’ is deterring multinationals from pouring money into the country.
Tim Sarson said the combination of red tape and high taxes means Britain is not as attractive as it has been in the past, and ‘probably dozens’ of companies have shunned the country over the past year.
This also applies to building materials giant CRH, which announced last week that it would move its main stock exchange listing from London to New York because it would “create more commercial, operational and acquisition opportunities.”
It comes ahead of the Chancellor’s spring budget this month, in which he is expected to raise corporate taxes from 19% to 25% – a move that will hurt many businesses.
Building materials company CRH, which is helping to build the Queensferry Crossing (pictured), recently announced it would move its stock exchange listing from the UK to the United States
Chancellor Jeremy Hunt plans to raise corporate tax in this month’s budget from 19% to 25%
Last week, business leaders pressured Mr Hunt to scrap the planned tax increase, saying it would slow down the economy and hurt growth.
Mr Sarson, who is from one of the Big Four consultancies, said companies from abroad were ‘making pretty loud noises about the British regime’s lack of competitiveness’.
He told the TelegraphThere is a general feeling that the UK is not firing on all cylinders, a reluctance to invest in the UK and a sense that the country is not quite what it used to be.
“We’re not really seen as a basket case, but people will often joke on conference calls, ‘what the hell are you guys doing?’
“What we cannot avoid is that the UK is now no longer trying to be a low tax location. It’s just somewhere in the middle of the pack now.”
He added that the UK needs a clear growth strategy or living standards will fall, leaving the country behind its counterparts.
‘We absolutely need (investments), otherwise we miss out on a lot of new technologies.
“There is a need for a very, very clear plan, because we are entering a world of huge competition to boost investment. The danger is that we are in between.
He added: ‘There is still a preference to be in the UK because of the language and the culture, but that said, it’s not nearly as obvious as it used to be.’
However, in the past week alone, a number of companies have decided to leave the UK and move into competitive markets. SoftBank and CRH decided to list their main stock exchanges in New York instead of London, while AstraZeneca decided to build a new factory in Ireland because of the ‘discouraging’ tax rate in Britain.
Last week, Lord Bilimoria, the vice president of the Confederation of British Industry (CBI), became the latest top business leader to demand that a planned increase from 19% to 25% next month be scrapped.
Mr Hunt has so far resisted calls to abolish the increase and insisted that the government stick to its plans.
Today, a poll of Tory activists by the Conservative Home website found that three in five want Mr Hunt to give tax cuts a higher priority than reducing the UK deficit.
Cobra beer founder Lord Bilimoria told an audience, including prominent politicians, at the British Kebab Awards on Tuesday: ‘Now is not the time to raise taxes.’
He said, “I’m all for not having a high tax burden at any time, let alone a time like this. Businesses have suffered so much.
Tim Sarson, UK head of tax policy at KPMG (pictured), says Britain risks falling behind counterparts in Europe and the United States
“They’ve had three years of the pandemic, followed by the war in Ukraine, the energy crisis, the cost of living crisis, inflation, and on top of that, you’re raising taxes. I mean, how much can business take?’
It came as the CBI separately on March 15 urged Mr Hunt to use the budget to save companies from a “double taxation” next month.
Companies are facing a corporate tax increase at the same time as the ‘super deduction’ policy expires – it gives big tax breaks to companies that invest in infrastructure and plant and machinery assets.
Pressure on the Chancellor to help businesses increased last week after an analysis suggested he could get a £30bn windfall after public finances turned out better than expected.
Lord Bilimoria, pictured, said he told then-Chancellor Rishi Sunak as far back as February 2021, ‘Don’t get taxes, because taxes will hinder recovery and stunt growth’.
He added: “He didn’t listen and he raised taxes to the highest level in 70 years and I think that’s the absolute wrong thing to do, including raising the corporate tax from 19 to 25 (and)… the super deduction, which was a great incentive to invest.
‘We are very concerned about it, because it is an enormous additional burden on the business community. It’s a big concern from an inward investment point of view.”