US multinational companies shun UK due to high taxes, warns KPMG

‘Britain is not firing on all cylinders’: US multinational companies shun UK due to high taxes and no plan for growth, warns KPMG

• The Big Four consultancy says Britain risks falling behind its counterparts
• It has warned that ‘dozens’ of US firms snubbed the UK last year alone

Dozens of US companies have decided against investing in the UK because of Jeremy Hunt’s insistence on putting up taxes in this month’s Budget, KPMG has warned.

The head of the firm’s UK tax policy department claims a perception that Britain is not ‘firing on all cylinders’ is holding multinational companies back from putting money into the country.

Tim Sarson said the combination of red tape and high taxes means Britain is not as attractive as is has been in the past, and that ‘probably dozens’ of firms have shunned the country in the last year.

This includes building materials giant CRH, which last week announced it was moving its main stock market listing from London to New York as this ‘would bring increased commercial, operational and acquisition opportunities’.

It comes ahead of the Chancellor’s Spring Budget this month, in which he is expected to increase corporation tax from 19% to 25% – a move that is set to bring pain to many firms.

Building materials firm CRH, which is helping construct the Queensferry Crossing (pictured), recently announced it would move its stock listing to the United States from the UK

Chancellor Jeremy Hunt plans to increase corporation tax from 19% to 25% in this months’ Budget

Last week business leaders put pressure on Mr Hunt to scrapped to planned tax rise, saying it would throttle the economy and hurt growth.

READ MORE HERE:  ‘How much can business take?’ Industry chief demands planned corporation tax hike from 19 to 25% in this month’s Budget is scrapped 

Mr Sarson, who is from one of the Big Four consultancy firms, said companies from overseas had been making ‘quite loud noises about the lack of competitiveness of the UK regime’.

He told the Telegraph: ‘There’s a general sense of the UK not firing on all cylinders, a reluctance to put investment in the UK and a sense that the country is not quite what it was.

‘We’re not quite seen as a basket case, but people will often joke on conference calls: ‘what the hell are you guys doing?’

‘What we can’t get away from is that the UK is now no longer trying to be a low tax location. It is now just somewhere in the middle of the pack.’

He added that the UK needs a clear growth strategy or living standards will drop, leaving the country ‘lagging behind’ its counterparts. 

‘We absolutely need [investment] otherwise we miss out on a whole bunch of new technologies.

‘There is a need for a very, very clear plan because we are entering a world of massive competition for incentivising investment. The danger is we’re caught in the middle.

He added: ‘There’s still a preference to be in the UK because of the language and the culture, but having said that, it’s nowhere near the same no-brainer as it was before.’

However, the last week alone has seen a number of firms decide to leave the UK and flock to competitor markets. SoftBank and CRH decided to place their main listings on the New York stock mark instead of in London, while AstraZeneca decided to build a new factory in Ireland due to Britain’s ‘discouraging’ tax rate. 

Last week Lord Bilimoria, the vice president of the Confederation of British Industry (CBI), became the latest top business leader to demand that a planned increase from 19% to 25% next month should be scrapped.

Mr Hunt has so far resisted calls for the hike to be axed, insisting the Government will stick to its plans.

Today a poll of Tory activists by the Conservative Home website showed three in five want Mr Hunt to make tax cuts a higher priority than reducing the UK’s deficit.

Cobra beer founder Lord Bilimoria told an audience, including prominent politicians, at the British Kebab Awards on Tuesday: ‘This is not the time to put up taxes.’

He said: ‘I’m just all for not having a high tax burden at any time – let alone a time like this. Businesses have suffered so much.

Tim Sarson, head of UK tax policy at KPMG (pictured), says Britain risks falling behind counterparts in Europe and the United States

‘They’ve had three years of pandemic followed by the Ukraine war, the energy crisis, cost of living crisis, inflation and, on top of that, you’re increasing taxes. I mean, how much can business take?’

It came as the CBI separately urged Mr Hunt to use the Budget on March 15 to save businesses from a tax ‘double-whammy’ next month. 

Firms face a rise in corporation tax at the same time as the ‘super deduction’ policy ends – it gives big tax breaks to companies investing in infrastructure and factory and machinery assets.

Pressure on the Chancellor to help businesses intensified last week after an analysis suggesting he will have a £30billion windfall after public finances turned out to be in better shape than expected.

Lord Bilimoria, pictured, said he had told then Chancellor Rishi Sunak as far back as February 2021: ‘Don’t put up taxes because taxes will stifle the recovery and hamper growth’.

He added: ‘He didn’t listen and he’s been putting up taxes to the highest level in 70 years and I think that is absolutely the wrong thing to do, including putting up corporation tax from 19 to 25 [and]… removing the super-deduction, which was a great incentive to invest.

‘We’re very concerned about it because it is a huge extra burden on business. It is a big worry from the inward investment point of view.’

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