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Those surveyed on behalf of the City of London Corporation believe more attention needs to be paid to the UK’s overall taxation regime, especially personal taxation, and many cite non-dom changes as a negative move, sending unhelpful signals to talented foreigners.

UK below average on taxation-related measures 

While the City believes that the Varney principles have won widespread support, the unpredictable and uncertain approach adopted by the recently-merged HM Revenue and Customs was also widely cited in the survey, for which the researchers CRA surveyed 36 key City firms.

Ireland, Switzerland, the Netherlands, Bermuda and Singapore were seen to be the winners with the UK’s former EU-leading position as an attractive tax regime at risk, particularly since other EU nations introduced lower tax regimes post-2004 - and new EU members joined with low regimes.

The UK was now seen to be below average on a number of taxation-related measures, including those of certainty and the attitude of the tax authorities.

Capital Gains Tax 

More than 80 per cent of those interviewed felt an avowedly anti-avoidance stance taken by the HMRC had led to a deteriorating attitude, with less consultation, more unwelcome surprise and more complexity – all against the widely-respected conclusions of the 2006 Varney report into a better functioning taxation system.

Further surprises such as those over Capital Gains Tax and the regime for those non-domiciled in the UK could lead to a relative decline in the UK-based financial services industry, said the report’s authors.

Michael Snyder, Policy and Resources Chairman for the City of London Corporation, said, “This independent research reveals worrying indications that the UK corporate and personal tax regimes, and the manner of their implementation, are impacting detrimentally on the competitiveness of the UK financial services sector and beginning to affect business location decisions.”

Gap over New York has narrowed 

A report commissioned by the City of London Corporation says that London still retains its position as the leading international global financial centre, although the gap over New York has narrowed.

Since the last report in September 2007 ago the lead over New York has halved to nine points, with leading City figures citing the Northern Rock issue, proposed non-dom taxation changes and concerns about the overall taxation regime.

London is shown as the global leader with 795 points (806 in the second GFCI), over New York on 786 (787). Hong Kong is in third place, followed by Singapore 675 (697), Zurich 665 (666), Frankfurt 642 (649) and Geneva 640 (645).

Factors taken into account include property costs, regulation and taxation, access to customers, the supply of skilled workers, the responsiveness of government to business’s needs and the overall quality of life.

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• Financial stability proposals published
• Good tax regimes no guarantee for competitiveness
• Red tape and transport network are the greatest threats to London's prospects
• Management clearout at Lara Croft firm SCi

Related links

• City of London Corporation
• Download the full report