It is with regret that I have to announce the decision by the The Times's business department to relocate to the Netherlands Antilles for tax purposes.

The Treasury's proposed crackdown on dubious expenses claims may look relatively trivial. But in the context of other moves by the tax authorities, the attack on questionable lunches has undermined confidence in the Government's commitment to maintain a competitive regime. Moving our domicile to the Antilles will provide badly needed tax stability. Plus, the snorkelling is better.

The department may reconsider, however, if the Treasury performs yet another humiliating tax U-turn and lifts the threat hanging over fictional taxi receipts.

Following the partial climbdown over capital gains tax and non-domiciled workers, the Treasury now appears to be planning to soften its proposals on the taxation of companies' overseas earnings. The shift on foreign earnings follows the recent decisions by Shire, the drug company, and United Business Media, the publisher, to move their tax domicile.

Sir Martin Sorrell, the head of WPP, has warned that the advertising group may follow suit and Hugh Osmond, the businessman behind PizzaExpress, Punch Taverns and Pearl Assurance, has raised the spectre of an exodus of entrepreneurs.

The Treasury could be forgiven for feeling a little aggrieved about the latest row.

It originally set up a review of the taxation of overseas profits in response to concerns expressed by UK multinationals about lack of clarity in the rules.

It finally published proposals last summer and now is understood to be planning changes following representations by companies.

After reading the fine print, business leaders expressed alarm that British companies might become liable for tax on profits made by overseas subsidiaries, which have already been taxed in their respective countries.

The Treasury is now thought to be proposing that British companies' foreign dividends will be exempt from tax. In exchange, it will propose tightening the regime in some areas, notably as relates to profits derived from intellectual property registered outside the UK.

Treasury officials insist that the softening of the foreign income proposals is not a U-turn. It has listened to business and responded appropriately.

But it is hard not to see it as further evidence of a government on the run. All taxpayers may start to fancy their chances of a rebate if they hold a gun to Alistair Darling's head.

david.wighton@thetimes.co.uk

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