US firms shun Britain over corporation tax raid fear, Hunt warned

JEREMY Hunt’s corporation tax rise is driving big US businesses away from the UK, an expert has warned.

Tim Sarson, head of tax policy at accounting giant KPMG, said American bosses were making ‘loud noises’ about Britain’s lack of competitiveness, with dozens of companies deciding not to invest here.

The claim will pile further pressure on the Chancellor to scrap the planned increase, which will take the levy from 19 per cent to 25 per cent next month.

Mr Sarson said the move was sending the wrong ‘signal’ and was putting off investors.

He added that US bosses joke on conference calls about the move, asking: ‘What the hell are you guys doing?’

Critics of Mr Hunt’s plan say a higher rate of corporation tax will make the UK less attractive, driving away investment and stifling economic growth.

Senior Tory MPs and business leaders are calling on the Chancellor to scrap it. Former Cabinet minister Sir John Redwood said having a lower rate was ‘very important’, adding: ‘ The Treasury’s planned rate rise will not deliver the increased taxes they think. It will deter investment and drive business abroad.’

Mr Sarson told The Sunday Telegraph: ‘ We’re definitely seeing quite a big dampening of demand and loud noises about the lack of competitiveness of the UK regime from US investors.

‘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. 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 also warned of the consequences a lack of investment in the UK could have, saying: ‘Our productivity will keep declining relative to other countries, particularly to the US and some of the bigger European countries.

‘ So 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.’ Mr Sarson 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.’

Sources told the Telegraph that other firms were considering taking their business out of Britain, with one saying: ‘The UK used to be apopular place to put yourheadquarters and now it’s seen by many as just another sales jurisdiction.’