Buy-out firms threaten mass UK exit over tax

As many as 100 buy-out firms may quit the UK over tax, the head of the British Venture Capital Association has warned.

The Independent on Sunday reports that BVCA chairman executive Simon Walker said the decision to scrap taper relief and introduce a flat capital gains tax rate of 18% had created opportunities for other jurisdictions to lure private equity firms away from the UK to friendlier tax climes.

Walker said Swiss tax authorities in particular had been making overtures to UK-based private equity firms.

Permira, Cinven and Bridgepoint have all acknowledged that their companies have been approached by Swiss jurisdictions, it was reported, and Walker said he knew of at least two firms considering such a move.

'Just as Lewis Hamilton made his private arrangements on tax, some cantons are now targeting our firms and directors to move their headquarters to Switzerland. With them may go many of the investors they bring to the UK, and that's not a comfortable thought,' Walker said.

Switzerland's tax system offers private equity firms and individual directors the opportunity to agree to pay a flat tax, in most cases linked to the rental value of property assets, that would be significantly less than amount of CGT that would be payable in the UK.

Further reading:

Capital Gains Tax changes - a special report

Walker calls for better private equity disclosure