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Bury St Edmunds: Greene King rejects Minister’s ‘tax avoidance’ claim after tribunal ruling

PUBLISHED: 16:54 28 April 2014 | UPDATED: 19:07 28 April 2014

The Greene King brewery in Bury St Edmunds.

The Greene King brewery in Bury St Edmunds.

Archant

Pubs and brewing group Greene King has denied suggestions it has been engaging in tax avoidance after losing the latest round in a battle with HM Revenue & Customs.

The Bury St Edmunds-based company, which says that it pays seven times more in tax than it does in dividends, added that it was considering a further appeal against the ruling.

According to HMRC, a scheme marketed by accountants Ernst & Young in 2003, involving internal loans between group companies, was designed to enable tax relief to be claimed on interest paid to another group company without that other company paying tax on the income it received.

However, the Upper Tribunal for tax affairs has now upheld a lower tier ruling that the scheme does not work.

HMRC says this means that Greene King and a number of other major companies which have also been using the scheme will between them have to pay an additional £36million in tax.

In an HMRC statement yesterday, Exchequer Secretary David Gauke said: “The vast majority of taxpayers play by the rules and the Government will continue to take tough action to tackle the minority who seek to avoid their responsibilities.

“HMRC wins 80% of the cases it takes to court and this win, in a very complex case, sends another clear message to tax avoiders. Anyone who gets involved in tax avoidance schemes is playing with fire. HMRC will pursue those involved through the courts, ensuring it collects the taxes that are due.”

However, Greene King, a member of the EADT/EDP Top100 listing of the 100 largest companies in Suffolk and Norfolk, said that the Upper Tribunal judge had accepted the the dispute was about the correct treatment of a loan for tax purposes and not a case of tax avoidance.

“Greene King has been paying its taxes for 214 years and has always taken these responsibilities very seriously,” the company said in a statement.

“We are a major contributor to the Treasury with a third of our turnover, or £375m, paid to HMRC in various forms of tax, in the last year alone. This is seven times what we pay to our shareholders in dividends.

“Over and above this, we occasionally take specific tax advice from experts, such as Ernst & Young in this case, about other areas of potential tax paid by Greene King.

“In this case, the Upper Tribunal court has disagreed with the advice we received and we are therefore currently considering whether to appeal this decision. The Upper Tribunal judge expressly said this was a question of correct accounting treatment of a loan, not tax avoidance.”

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