City could use Brexit to deprive the Treasury of tax billions

11 Sep 2018

This article first appeared in The Times on 11 September 2018.

Philip Hammond has been warned that he faces a multibillion-pound hole in his budget projections as City businesses use Brexit to reduce their tax bills.

Treasury officials are understood to have told the chancellor that unless there is a change to the law after Britain leaves the EU, the government could lose £7 billion in corporate VAT receipts. Efforts to claw this back could lead to businesses moving more operations to the Continent, causing greater loss.

City corporate tax returns, which provide at least £7 billion a year, are also expected to fall by about 10 per cent.

As part of Brexit contingency plans the vast majority of European-facing banks with headquarters in London are moving some operations to the Continent. One source said that…

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