Tribunal rejects Greene King tax appeal

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Upper tribunal judge Mr Justice Mann has thrown out for the second time an appeal [UKUT 178] from brewery and pub group Greene King over an EY-devised tax scheme.

The brewer has been trying to overturn the Revenue's rejection of the complex scheme for more than a decade, which relates to the correct treatment of a £300m internal loan.

Greene King's auditors EY had devised and marketed the tax planning scheme under the name Project Sussex. However, the scheme not only failed to enable Greene King to avoid tax on £21.3m of interest made to one of its subsidiaries, but also left it unintentionally taxed twice on some gains.

The judge said...

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Robert Lovell
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28th Apr 2014 15:28

"Various forms of tax"

Once again this weaselly phrase comes out.

On the basis that their turnover is all subject to VAT, then 20% of their turnover is VAT which was never theirs in the first place. I should also imagine they have a substantial wages bill, so they will be paying over tax and employee's NIC which is on behalf of their employees. It is only when you get on to employer's NIC that you are actually talking about additional sums paid to HMRC.

As for the amount paid compared to what they pay shareholders, that is just a meaningless comparison. They choose what amount to pay out as dividends, and presumably are in a position to pay out much more if they wanted to.

I also hope that I am not the only one disturbed by the company auditors being the ones who devised and marketed the tax planning scheme. Even with chinese walls between departments, would the audit side really refuse to sign off on a scheme devised by their co-workers?

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28th Apr 2014 15:45

Stephuran - it was even worse than that in this case. The tax treatment depended on the accounting treatment. I understand that there was (is?) an FRC investigation into EY on this.

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