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An investigation by the charity TaxWatch charity explains that the case arose from an international financing operation routed through the UK that HMRC approved in 2005.
According to the UK tax department, however, the AUS$5bn that was supposed to go to subsidiaries in Australia was cycled in a between the US, Luxembourg, the UK and Australia before ending up back at corporate HQ a few days later.
The transactions had no commercial purpose other than to create a “triple dip” tax advantage, HMRC alleged. Having discovered the deception, the department petitioned the High Court to annul its original agreement, which would mean GE had to pay back tax on the transaction, plus penalties and interest amounting to US$1bn.
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Nice one HMRC, that is how you raise tax revenues, getting stuck in hard wich will push back not just that company, but put the wind up other companies who are taking 'aggressive' tax policies.