Sir, I struggle to imagine a multinational company moving its headquarters from Britain because the Revenue is getting too good at stopping companies from avoiding tax (Business Editor’s Commentary, Jan 17). While businesses rightly look at tax when considering where they locate, what they focus on are effective tax rates.
Britain actually enjoys a low corporate tax rate compared with much of Western Europe and the US, and many of the other features of our tax system that made it relatively uncompetitive have been reformed in recent years.
The real challenge is to maintain this competitive position in the face of significantly lower corporate tax rates in territories that are already lower-cost business locations, such as many new EU member states in Eastern Europe.
Notwithstanding the need to take seriously this challenge, to suggest that tax is the only, or even the predominant, factor in a decision on where to locate is misleading.
It adds a crude element to a very necessary discussion: what makes Britain an attractive place to do business, how we can improve this and how we deal with any shortcomings.
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KEVIN PHILLIPS
Tax Partner,
Baker Tilly
London WC1