Redomiciliations: Should UK Multi-National Groups Move Offshore?

Introduction

In the last fifteen months or so, a number of high profile UK listed companies have redomiciled from the UK. Some of the companies to redomicile have included United Business Media Plc, WPP Plc and Beazley Group Plc¹. This article explains why a company may choose to redomicile and explains how to effect this.

Why redomicile?

Under current UK tax rules, a group which has a UK incorporated tax resident holding company and has UK income and non-UK businesses, pays UK corporation tax on its UK profits and is taxed at the local rate on its non-UK profits. If the non-UK businesses' effective tax rate is less than three-quarters of the UK rate (ie, 21 per cent based on a UK 28 per cent corporation tax rate), the non-UK income could be deemed to be income of the UK parent, even if not received in the UK and therefore subject to UK tax on the difference between the UK rate and the local rate. This is under the so-called UK CFC rules, which can impose both