NORTH West companies trading overseas are not competing on a level playing field, according to tax experts.

Complying with UK tax rules is making the management of foreign currency and other treasury issues increasingly complex and costly, said Brian White, tax partner at finance experts Arthur Andersen.

Mr White said the changing tax environment is working against companies as they try to cut the cost of doing business overseas.

"Although the banks have developed some sophisticated products to help companies manage the movement of cash around the world and reduce the interest rates they pay, the UK tax system is five years behind," he told an audience of finance professionals.

"Inevitably this means companies are facing an increased administrative burden at the very least. In some cases, they may encounter tax problems and even end up facing an Inland Revenue investigation."

Mr White added: "Businesses need to identify the tax issues up front and then agree a suitable approach to comply with the Inland Revenue."