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Aveva CEO to Government: ‘Try Not to Help Us’

Monday, 12 Nov 2012 | 8:55 AM ET

The U.K. government should avoid trying to help businesses, technology group Aveva's CEO said on Monday, because government intervention inevitably leads to more legislation and red tape.

Derek Berwin

Chief Executive Officer Richard Longdon told CNBC his advice to government was: "Try not to help us because every time you do, you give us more problems."

The U.K. government has been trying to boost business activity and job creation and has promised to cut red tape for businesses.

"You say you are going to give us less legislation and we end up with more. More employment law, and everything else," said Longdon.

According to him, European Union rules played a similar role in hampering business. "All we get for all the money we pay to Europe, in my view, is more regulation that holds us back compared with our Asian counterparts," Longdon told CNBC Europe's "Squawk Box."

Aveva currently pays corporate tax at a headline rate of 29 percent, the CEO said.

His comments came on the day senior executives at Starbucks, Google and Amazon.com will face questioning from U.K. lawmakers on how they have managed to pay low or minimal taxes in the U.K., despite sales worth billions of dollars.

Aveva CEO Tells Government: Try Not to Help Us
Richard Longdon, CEO of engineering software group Aveva, tells UK government to avoid trying to help businesses, "Because every time you do, you give us more problems".

Asked if the lower taxes paid by other firms worried him, Longdon said: "It does not worry me, it annoys me. … Our biggest gripe, I suppose, is that the money we pay is not invested into the infrastructure that we need to build the business."

Starbucks has faced growing public hostility since Reuters reported in October that its U.K. subsidiary has paid zero income tax in the last three years, and only 8.6 million pounds ($13.7 million) since 1998 — despite sales worth more than 3 billion pounds ($4.8 billion).

In an interview with CNBC in mid-October, Nigel Farage, leader of the strongly euro skeptic U.K. Independence Party, faulted burdensome European Union rules for encouraging firms such as Starbucks to play "tax arbitrage," as part of a bid to shelter income in European countries with more favorable tax regimes.

But Starbucks CEO Howard Schultz has said the U.K. tax issue had been sensationalized and the company hasn't paid corporate tax because it hasn't made a profit.

Meanwhile, British Finance Minister George Osborne has announced he will lead a push among the Group of 20 (G20) countries to make multinational companies pay their "fair share" of taxes.

Aveva, which is a member of the FTSE 250, reported first-half earnings on Monday. The company posted a 10 percent rise in six month profits, which Longdon attributed to strong performance in the oil and gas sectors. (Read More: Oil Prices May Ease on Favorable Supply Outlook: Survey)

Shares of Aveva have risen 23 percent over the past year.

—By CNBC.com's Katy Barnato

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