The Bermuda-based insurance firm Lancashire Holdings is to move its tax base
to the UK in order to benefit from planned changes to the UK's Controlled Foreign
Company (CFC) rules.
The intention to relocate to a UK tax residency was announced on July 27. According
to a statement from the company, Lancashire's Board of Directors has been reviewing
its Bermudian tax residence at regular intervals, with the decision following
the publication of the UK's latest CFC reform proposals. In advance of the proposed
move, Lancashire will seek shareholder approval for a change in its bye-laws
to permit Board meetings to be held in the UK.
The statement goes on to praise and welcome the government's wish to explore
ways of treating business written in the UK, but with limited UK connection,
more favourably under the new CFC regime. The firm will, in conjunction with
other corporations, respond to the government's consultation over the coming
months, with a view to ensuring that the final CFC rules operate fairly.
The government's reforms were published at the beginning of July. According
to the Treasury the changes will: target and impose a CFC charge on artificially
diverted UK profits, ensuring that UK activity and profits are fairly taxed;
exempt foreign profits where there is no artificial diversion of UK profits;
and ensure that profits arising from genuine economic activities undertaken
offshore are not taxed.
The proposals also include a commitment outlined at the Budget, whereby, by
2014, there will be a partial exemption for financing structures that will normally
result in a 5.75% tax charge on the overseas profits made from intra-group financing
activities.
Lancashire
is currently based in Bermuda and has both UK and Bermuda-based insurance subsidiaries.
In moving its residence to the UK, Lancashire expects to meet the conditions
for the temporary period exemption, meaning that this should not impact Lancashire's
UK tax position.
Lancashire said that it is not required to move its place of incorporation in order to qualify
for the temporary period exemption, and currently intends to remain incorporated
in Bermuda. In addition, its Bermuda-based insurance subsidiary will continue
to operate and be incorporated in Bermuda.
LAWANDTAX-NEWS.COM
