HMRC has won a £79m case against Goldman Sachs and agriculture giant Cargill after the American companies attempted to avoid paying taxes in the UK
The long-running case involves a tax avoidance scheme used by Teesside Power Limited (TPL), subsequently renamed GDF Suez Teesside Limited.
In 2001 Cargill’s private equity division and Goldman Sachs took ownership of TPL following the collapse of its owner Enron in 2001.
Teesside Power claimed hundreds of millions of pounds were owed to the plant by other Enron subsidiaries during its US bankruptcy. Teesside Power set up a Jersey-based company to try to avoid paying corporation tax on about £200m by converting it into shares.
The scheme was devised by EY, which was also TPL’s auditor at the time.
Her Majesty’s Revenue & Customs objected the structure, and has now issued a £79m bill following a Court of Appeal ruling this month.
According to The Sunday Times, Cargill and Goldman said in a joint statement: “The decision regarding the interpretation of tax law is disappointing but the parties fully respect the court process. In the meantime, all UK taxes, including those disputed, have been paid.”
Following the decision, Penny Ciniewicz, director of Customer Compliance at HMRC said: “Anybody who tries to exploit the tax rules to gain an unfair advantage will come unstuck.
“We have dedicated teams in place to tackle abuse wherever we find it.”
It was one of the largest corporate tax rulings this decade.
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Courtesy of internationalinvestment.net