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City chiefs beg Hammond for tax competitiveness review

12:57 pm, 18th June 2018

Sky News has obtained a letter, signed by the bosses of Britain’s biggest financial services trade bodies, which calls for the Chancellor to launch the review alongside other measures aimed at ensuring the industry’s competitiveness in the post-Brexit period.

In their letter, the chief executives of groups including the Association of British Insurers, the Investment Association and TheCityUK will seek Mr Hammond’s backing for further reforms to Britain’s immigration system, a network of regional regulatory offices to work with start-up businesses, and the creation of a new forum comprising the finance sector, Government and regulators.

Sources said the letter, which has also been signed by the chairman of UK Finance, the chief executive of Innovate Finance and the policy chairman of the City of London Corporation, is due to be sent to the Treasury later on Monday.

The City chiefs are writing to Mr Hammond ahead of his speech at the Mansion House dinner later this week – one of the flagship annual events for the UK’s financial services industry.

Their request for an independent review of the UK’s business tax system echoes concerns from different City constituents in the decade since the financial crisis, and underlines a growing anxiety about the industry’s post-Brexit competitiveness.

“There is a clear indication from international investors and firms that they would welcome stability, certainty and streamlining of the UK’s tax system,” the letter says.

“With regard to the levels of taxation, it is important that the UK remains competitive, and an independent review and analysis of aggregate levels of taxation, coupled with a benchmarking exercise against comparable jurisdictions would be welcome.

“This should focus not only on corporates, but also on the tax attractiveness of the UK to entrepreneurs, especially in Fintech [financial technology].”

The letter follows a meeting between the trade body chiefs and Mr Hammond and senior officials earlier this month, according to insiders.

While Theresa May sought to reassure European finance executives last week that changes to the UK visa regime would aid the City, the letter to Mr Hammond makes clear that more needs to be done in this area.

“The recent announcement to introduce a new visa class for entrepreneurs is a positive step, as are indications that the government is examining what more it can do in this area.

“In particular, we would point to the need for flexible arrangements to allow qualifying staff working on short term projects to move easily into the UK, and urgent change to the mechanism by which the Tier 2 cap operates to avoid discrimination in favour of London over the regions, where salaries are higher.”

The City executives will also urge the Chancellor to provide more support to financial services businesses outside London, including the creation of “small, regional supervisory offices” for the UK authorities.

None of the signatories contacted by Sky News would comment on Monday.