High corporation tax rates 'may drive business out of UK'

Date: 16th September 2009

Businesses operating in the UK may look to move overseas should the government not make immediate changes to the current system of taxation, it has been argued.

Research carried out by the Association of British Insurers (ABI) found that more than 80 per cent of sector executives feel that they could be forced to desert the UK for more favourable tax regimes overseas should ministers not make the UK more competitive.

As well as a cap on corporation tax, the ABI has also called for more incentives to be rolled out to encourage insurance firms based overseas to open up operations in the UK, again so as to boost competition.

According to Stephen Haddrill, director general of the professional body, tax regimes such as Bermuda and Ireland now offer a number of significant economic advantages over the UK.

"The rise of Bermuda in recent years in the reinsurance sector shows how easily other countries can capture significant quantities of financial business from London, despite all its strengths and talent," he explained.

This comes just days after BNP Paribas warned that UK economic growth could be hindered once the recession is over due to high levels of corporate tax.