up shop in Jersey. By Mike Jeffrey
It has been widely reported in the UK press that a number of UK corporates with significant non-UK business interests are considering migrating for tax purposes to Ireland or other lower taxation jurisdictions in an effort to combat what they perceive to be an increasingly uncompetitive UK corporate tax regime.
A recent YouGov poll reported that one in three UK companies are considering such a move, with some 38 per cent of executives polled at medium and large companies in the UK stating that they had discussed moving operations offshore to reduce corporation tax.
One specific issue that has prompted UK corporates to consider migrating was the consultation launched by the Treasury and HM Revenue and Customs in June 2007, proposing changes to the way in which the foreign profits of UK corporates are taxed.
While the stated intention was that the changes were “revenue neutral”, there was a concern in some quarters that the changes could bring significant amounts of foreign income into the UK tax net.
A number of company migrations have recently been announced, including Shire, United Business Media and Henderson. The latter migration received particular interest in the press as it was the first financial services business to announce such a move.
Henderson, like Shire and United Business Media, are seeking to migrate to Ireland and have selected Jersey as the place of incorporation of their new holding company. Pursuant to a UK scheme of arrangement and associated reduction of capital, the shareholders of the existing UK incorporated holding company receive shares in the new Jersey holding company, the shares of which are then admitted to listing on the London Stock Exchange.
Such transactions are regarded as a great opportunity for the island. These very large corporates have decided that Jersey offers them the corporate law flexibility and reputational integrity that they require and their investors expect. This, in addition to being a vote of confidence in Jersey, represents a new stream of business as these businesses go on to expand, raise capital and acquire other businesses.
Mike Jeffrey is a partner at Carey Olsen