The Government could have another nondom debacle on its hands. This time it’s corporate. Shire, the drugs group that is one of Britain’s top 100 companies, is planning to go nondom and move to Ireland for tax purposes.

The company tried hard yesterday to avoid creating a political row. But it is unlikely to succeed. By saying that it believed the move would help to protect its tax position, the implication was clear.

Recent changes to the UK tax regime - not least those involving nondomiciled workers – and present discussions about the rules governing overseas corporate earnings should give any British company with big international operations pause.

Is the Government going to make the UK tax environment even less attractive? Shire is not waiting to find out. It is shifting domicile to Dublin, where the corporate tax regime is already more friendly. And, just as important, more stable.

Gordon Brown has been boring on for more than a decade about the importance of stability. As he said in his Mansion House speech in 2006, the key to economic success in a globalising world is not just stability in monetary and fiscal policy but also “stability through a stable and competitive tax regime”.

Yet the UK tax regime has been anything but stable and has become progressively less competitive. For many business leaders, the recent changes to capital gains tax – which reversed the reforms that Mr Brown introduced ten years ago – and the assault on nondom workers was the last straw. They have lost confidence in the Government’s commitment to stability and competitiveness.

Some companies have already voted with their feet. When Experian was demerged from GUS in 2006, it opted to be based in Ireland. A number of American companies, including Kraft and Yahoo!, have switched their European headquarters to Switzerland. Shire is the first FTSE 100 company to shift its domicile, but tax advisers say that a number of others are considering it.

For the UK, the immediate impact of Shire’s move will be largely symbolic. It is not shifting any more people to Ireland, where it already has an operation, and merely will move its board meetings to Dublin. It will not pay any less tax on its UK profits and at present it does not pay any UK tax on its overseas profits (although it feared that it might in future). But it is now bound to think differently about the relative merits of the UK and Ireland in terms of future expansion. Britain has benefited greatly from the growth in the number of international companies based in London in recent years. Unless the Government wakes up to the threat, more will be lured away by that warm Irish welcome.

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