Why George Osborne won’t be sending WPP’s Sir Martin Sorrell his best wishes this Christmas

Sir Martin Sorrell and WPP have been lobbying hard for changes to the UK ‘controlled foreign companies’ tax rules which are designed to stop UK-based companies and their overseas subsidiaries paying lower rates of tax abroad.

The UK coalition government is due to announce changes to the regime in March but has been telling some big companies what it has in mind and WPP evidently doesn’t like what it’s hearing.

Sorrell (pictured) told UK financial paper City AM yesterday: “We’re still studying the document. It does not go as far as we thought it might… It’s very much in the right direction but not quite far enough in our case. We’re assessing what more needs to be done and the Treasury is being very responsive.”

WPP moved to Ireland in 2008 because of the new measures and also to take advantage of the rock-bottom corporate tax rates over there.

This is all very embarrassing for Osborne who announced some months back that he was going to make changes to the regime precisely to lure back big companies like WPP, which he unwisely mentioned by name. So Sorrell’s response is what is politely known as a ‘raspberry.’

This won’t worry Sorrell too much of course who these days cheerfully tells governments around the world how they should run their affairs. But Sorrell’s decision to go public with his views on UK tax makes it much harder for Osborne and his Treasury team to go further with changes as it will look like they’re dancing to WPP’s tune.

Which won’t please Osborne or his boss PM David Cameron. Neither will it go down particularly well with the bosses of other big companies in the same boat if the Treasury now digs in its heels.

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About Stephen Foster

Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.