The decisions by United Business Media (UBM) and pharmaceutical firm Shire to relocate their headquarters from the UK to Ireland has fuelled further debate about how foreign earnings are taxed in Britain.

UBM and Shire are the latest in a string of multinational firms, including Invesco, Experian and Shell, to seek domicile in Ireland as the republic continues to promote itself as a low-tax, business-friendly investment destination.


UBM said the decision to move to Ireland was based on the country’s less complex system of taxation. The UK tax system imposes tax on all companies in a worldwide group. Consequently, UBM has had to manage the interaction between the UK tax system and the separate tax systems of the multiple countries in which it operates.

“The complexity of the tax system has given rise to both significant compliance costs and risks of inadvertent tax charges arising,” said UBM.

Shire, which is one of the UK’s biggest pharmaceutical companies, said that moving its headquarters was a response to its changing focus from a primarily UK business to an international business with the vast majority of its revenues generated from outside the country.

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

The spate of high-profile multinationals leaving London has prompted a review of the UK’s taxation on foreign profits, indicating government fears of a wider UK business exodus.

At the end of April, chancellor of the exchequer Alistair Darling launched a competitiveness review into the UK taxation administration. He invited multinationals to sit on a new working group to advise ministers on the long-term challenges facing the UK tax system.

The government has been widely criticised since it introduced proposals for a new ‘controlled company’ regime, changing the tax treatment of UK companies with overseas subsidiaries to stop them from reducing their bills by diverting profits to low-tax jurisdictions.

The government has argued that anti-avoidance rules are needed if it agrees to multinationals’ requests to move in line with much of Europe by exempting dividends from foreign subsidiaries from tax.