WPP to quit UK for Ireland for tax reasons

LONDON - In another blow for Gordon Brown and his business taxation policies, Sir Martin Sorrell's WPP Group is to leave the UK and shift its British headquarters to Ireland because of changes to the tax regime, which could cost the marketing group tens of millions of pounds.

WPP is expected to announce this week it is moving its tax domicile from the UK because of the threat of a markedly higher corporation tax bill.

The group, which is currently engaged in a hostile takeover bid for TNS, paid £204m in tax last year, but it is thought to believe that the changes would add ten of millions to its British tax bill.

Sorrell has been particularly vocal in his opposition to the planned changes and has been lobbying the Government to reconsider its plans.

In July, Sorrell said he was unimpressed by the Government's promise to scrap plans for a special new tax on multinational companies.

Sorrell does not believe the compromise goes far enough and the company now believes his campaign has not had the desired effect.

The Treasury has conceded that its plans to introduce new rules on companies with overseas divisions would have meant a major tax rise for intellectual property specialists.

WPP is the latest in a growling line of UK companies to abandon the UK for tax reasons. Ireland which does not have similar rules, is proving an attractive option.

Shire, the UK's third-largest pharmaceutical company, and United Business Media, the publisher, both decided in April to move their tax domicile to Ireland.

The move will cause embarrassment to Gordon Brown, particularly because Sorrell has acted as an ambassador for British business.