As part of their tax planning strategies, some hedge funds are moving out of the UK and to other countries, it has been claimed.
Writing on CITY A.M, editor Allister Heath said the coalition administration is being too complacent when it comes to levies and may be driving such operations away, which will ultimately damage the economy.
He remarked: “I have learnt that around 25-50 hedge funds have already moved out to Switzerland, with up to ten relocated to Jersey.
“Meetings regularly take place between Jersey and other, much larger financial institutions, including top UK-based asset managers.”
It is indeed sometimes the case that organisations decide as part of their tax planning and asset protection schemes to relocate the base of their operations.
Commenting on the impact the alleged fleeing of hedge funds from Britain is having on the country, Mr Heath added: “Kinetic Partners estimates that around 1,000 hedge fund managers have already left the UK; it puts their average income at £1.5 million [to] £2 million per year.
“The loss to the exchequer has now reached a minimum of £500 million and is probably much higher.”
One of the firms that has made a decision to leave the UK is Wolseley, which believes its action will enable it to save around £23 million a year in levies.
The debate concerning the impact of higher taxes on industry and whether they cause businesses to relocate is raging in Britain as the government devises its plan concerning how best to reduce the deficit that was made considerably worse by the credit crunch and the subsequent action that had to be taken to save the banks.
Some claim that introducing higher taxes will cause companies keen to enhance their asset protection and profits to leave for other countries. Others say such an exodus will not occur.