Claim Boots underpaid UK tax by £1.3bn [Cayman Islands involved]
By Gabi Thesing From Irish Examiner
Anti-poverty advocates have asked the British government to investigate the offshore tax arrangements of Alliance Boots, alleging that the pharmacy chain operator has underpaid by as much as £1.3bn (€1.6bn).
UK charity War on Want and US labour union federation Change to Win called on chancellor of the exchequer George Osborne and UK Revenue and& Customs to probe the company’s use of so-called Limited Liability Partnerships, some members of which are based in the tax haven of the Cayman Islands.
“We strongly urge HM Revenue & Customs to bring an investigation into Alliance Boots’ use of these LLPs,” the organisations wrote in a letter that was sent yesterday. They contend the company avoided paying at least £1.12bn through interest deductions over six years, reducing its UK corporate tax bill 95%.
Alliance Boots, in which US giant Walgreen acquired a 45% stake last year, said in a statement that its tax affairs are organised “strictly in compliance with all applicable laws in each jurisdiction in which it operates.”
Since late 2012, the UK Parliament has held a series of hearings on global tax avoidance, including examinations of the strategies used by Google, Amazon and Starbucks.
The US Senate has held hearings on the tax-avoidance techniques of several companies that have used subsidiaries in locations such as Luxembourg, Bermuda and Ireland to pare billions of dollars off their tax bills.
The OECD is close to completing a plan requested by the G20 to combat so-called corporate profit-shifting, including the use of offshore units.
In their letter, the groups said after being bought in a leveraged buyout in 2007, Alliance Boots transferred store properties to a group of LLPs and used a Cayman Islands partner to “provide flexibility and a veil of secrecy to the whole business.”
According to a separate briefing note, Alliance Boots gets the advantages of being located in the UK, such as local law and rules on registered land holdings, while also receiving offshore tax advantages related to capital gains and interest income. Any profits on rental income would also be partly attributable to a Cayman entity, they said in the note.
Alliance Boots said the Cayman incorporated company is subject to UK tax, while UK properties that are held in an LLP structure are fully taxable in Britain, “so there is no tax benefit arising from this structure.”
The company said it paid 50% more cash taxes in the 12 months to March than in its last year as a public company through 2007, even though about two-thirds of revenue now comes from outside the UK.
For more on this story go to: http://www.irishexaminer.com/business/claim-boots-underpaid-uk-tax-by-13bn-270397.html
Related story:
U.K. Government urged to probe alliance boots over tax affairs
By Gabi Thesing From Bloomberg
Anti-poverty advocates asked the U.K. government to investigate the offshore tax arrangements of Alliance Boots GmbH, alleging that the drugstore operator has underpaid by as much as 1.3 billion pounds ($2.2 billion).
U.K. charity War on Want and U.S. labor union federation Change to Win are asking Chancellor of the Exchequer George Osborne and Her Majesty’s Revenue & Customs to probe the closely held company’s use of so-called Limited Liability Partnerships, some members of which are based in the tax haven of the Cayman Islands, a British overseas territory in the Caribbean.
“We strongly urge HM Revenue & Customs to bring an investigation into Alliance Boots’ use of these LLPs,” the organizations wrote in a letter obtained by Bloomberg News that was sent today. They contend that the company avoided paying at least 1.12 billion pounds through interest deductions over six years, reducing its U.K. corporate tax bill by 95 percent.
Alliance Boots, in which Walgreen Co. (WAG) acquired a 45 percent stake last year, said in a statement that its tax affairs are organized “strictly in compliance with all applicable laws in each jurisdiction in which it operates.”
Since late 2012, the U.K. Parliament has held a series of hearings on global tax avoidance, including examinations of the strategies used by Google Inc., (GOOG) Amazon.com Inc. and Starbucks Corp. The letter from War on Want and Change to Win was also sent to Margaret Hodge, the opposition Labour Party lawmaker who heads Parliament’s Public Accounts Committee and last year crossed swords with senior executives from those companies.
Senate Hearings
In the U.S., the Senate has held hearings on the tax-avoidance techniques of several companies which have used subsidiaries in locations such as Luxembourg, Bermuda and Ireland to pare billions of dollars off of their tax bills.
The Organization for Economic Cooperation and Development, a grouping of developed economies, is close to completing a plan requested by the Group of 20 nations to combat so-called corporate profit-shifting, including the use of offshore units.
In their letter, London-based War on Want and Change to Win say that after being bought in a leveraged buyout in 2007, Alliance Boots transferred store properties to a group of LLPs and used a Cayman Islands partner to “provide flexibility and a veil of secrecy to the whole business.”
According to a separate briefing note made available to U.K. lawmakers by the organizations earlier this year, Alliance Boots gets the advantages of being located in the U.K., such as local law and rules on registered land holdings, while also receiving offshore tax advantages related to capital gains and interest income. Any profits on rental income would also be partly attributable to a Cayman entity, they said in the note.
‘No Benefit’
Alliance Boots said the Cayman incorporated company is subject to U.K. tax, while U.K. properties that are held in an LLP structure are fully taxable in Britain, “so there is no tax benefit arising from this structure.”
The drugstore operator said it paid 50 percent more cash taxes in the 12 months ended March 2014 than in its last year as a public company through 2007, even though about two-thirds of revenue now comes from outside the U.K.
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