Logica threatens to quit UK over share options tax changes
Published: 04 Jun 2001 10:24 BST
Proposals to change the taxation rules on employee shares options could force Logica to move overseas amid claims that the plans could have a big negative impact on the profits of some firms.
Logica, one of the most successful UK IT companies of the past decade, is reported to be angry about plans to force businesses to include share options in profit and loss accounts. Like many other technology companies and dot-coms, Logica uses share options as a way of recruiting and retaining workers. It is claiming that the proposals, if enforced, could drive many firms abroad.
Andrew Given, Logica's finance director, told the Independent on Sunday that moving overseas was one option which Logica could take. "It would be a serious move, but this is a serious issue," he said. Logica employs over 11,000 people worldwide, and is thought to be keen to expand into the US.
The change, which could be in place within two years, was proposed by the Accounting Standards Board (ASB). It insists it is merely reacting to increased popularity of share options in recent years, and claims that its plans would be a boost to financial transparency. The ASB's proposals are being backed by the National Association of Pension Funds and the Association of British Insurers.
According to some estimates, companies hit by this change in share option rules could see 20 percent of their profits wiped out. Both BT and Vodafone are believed to share Logica's concerns.
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