Hey, it’s magic. Shire, the pharmaceuticals business best known for its ADHD and genetic therapy work, is re-organising itself as a London and Nasdaq-listed entity through a Jersey incorporated holding company – which will somehow be tax-resident in the Republic of Ireland.
Nothing will change operationally. No job losses are envisaged, with Shire retaining its major sites in Basingstoke and Philadelphia. Shareholders do have to vote through the changes, however.
But how does this work – a British firm which can trace its history back to 1986 simply adopts a new corporate wrapper and, almost overnight, seemingly avoids UK corporation tax? A few Treasury officials might want to know – before the rest of corporate Britain disappears down the same revenue drain.
To the Shire nominated media handler:
FT Alphaville: Hi there. Wondered whether you could talk us through this Jersey structure?
Shire felt: Can we talk later in the day? You are not writing for FT.com are you?
FT A: I am. Part of…
Felt: Well, if it’s quick. I am about to get in a car.
FT A: Ok, well can you just explain how the Jersey structure works, whereby Shire becomes an Irish company for tax purposes.
Felt: No we could not! That’s a matter for us and our advisers.
FT A: Why not?
Felt: Well what do you want to know?
FT A: How is it that a Jersey holding company pays Irish taxes?
Felt: Why wouldn’t it?
FT A: Well, for a start, Jersey is not part of Ireland.
Felt: For tax purposes we will be based in Ireland.
FT A: Zzzzzzz………..
The last British-born member of the Footsie that threatened to flounce off to Ireland because of tax was Vodafone back in June 2000, when then chief executive Sir Christopher Gent told listeners to the Today programme that he had had enough of supposedly penal rates in the UK. Popular opinion forced Vodafone into an immediate reversal.
Shire has the genuine argument that most of its revenues now come from the US. But we (and probably others) expect it to explain its plan in more detail.