Shire moves offshore to escape tax burden

Daily Telegraph: Shire moves offshore to escape tax burden

By Jonathan Russell
Last Updated: 2:49am BST 16/04/2008

Shire, the UK’s third largest pharmaceutical group, is to move offshore to escape the country’s increasingly heavy tax burden.

In what tax and business experts called a dangerous precedent, Shire announced on Tuesday it was to create a new holding company based in Ireland.

CBI director-general Richard Lambert said: “We are particularly worried that an uncompetitive corporate tax system is spoiling the UK’s attractiveness as a place to do business, and that other internationally mobile firms will follow Shire’s path.”

Although other companies such as Experian and Shell have moved offshore as part of a demerger or wider corporate restructuring, tax experts said this was the first time a blue chip company had moved its headquarters purely for tax reasons.

A company statement said: “Shire has concluded that its business and its shareholders would be better served by having an international holding company with a group structure that is designed to help protect the group’s taxation position.”

The move will cost Shire roughly £3m but it will immediately reduce its £4.2m corporation tax bill.

It will also reduce concerns about a potential land grab on overseas profits being worked on by the Government.

Although the Chancellor ducked the issue at the last Budget, the Treasury is understood to be looking at introducing changes early next year.

Chris Sanger, head of tax policy at Ernst & Young, said: “What this will show is that those companies that have large profits coming from outside of the UK will benefit from moving their headquarters.”

Other international companies including Yahoo! and Kraft have recently shunned the UK in favour of other European cities to base their regional headquarters.

According to company reports Shire’s current tax rate is just over 20pc.

Overseas competitors such as the Swiss group Novartis can pay as little as 12pc.

Last year Shire made $82.4m (£42m) on revenue of $2.4bn. The total tax bill was $51m.

Shire said the move offshore would not affect the firm’s workforce or its listings on the London and New York markets. Shire shares fell 13 to 927p.
 
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