Food & Drink

HMRC: Diageo does not have to pay £277m tax bill

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Spirits big Diageo said it doesn’t should pay a possible £277 million (US$385.2m) in tax liabilities, following HM Income and Customs (HMRC)’s determination that the agency didn’t obtain unlawful state help.

Diageo won’t should pay a possible £277m to cowl UK tax breaks

In keeping with its fiscal 2021 report, Diageo escaped a nine-figure tax payout earlier this yr when HMRC dominated that the enterprise didn’t acquire an unfair benefit by the UK’s group financing exemption tax scheme.

In 2013, the UK authorities launched the group financing exemption, a part of its managed international firm (CFC) guidelines. The scheme offered multinationals with tax exemptions on sure earnings obtained by offshore subsidiaries.

In April 2019, after an 18-month investigation, the European Fee dominated that the scheme was a type of state help, giving unfair benefits to some firms.

“Anti-tax avoidance guidelines are necessary to make sure that all firms pay their fair proportion of tax. However they have to apply equally to all taxpayers,” Margrethe Vestager, European commissioner accountable for competitors coverage, mentioned on the time.

“The UK gave sure multinationals a selective benefit by granting them an unjustified exemption from UK anti-tax avoidance guidelines. That is unlawful beneath EU state help guidelines.”

The European Fee then ordered the UK to get well funds from the multinationals concerned.

As one of many companies lined within the exemption scheme, Diageo calculated its potential legal responsibility at round £277m, and raised an attraction with the Basic Courtroom of the European Union towards the choice.

In Diageo’s fiscal 2021 outcomes, launched final Friday (30 July), the Johnnie Walker proprietor mentioned a ruling had been made in its favour 5 months earlier: “In February 2021, HMRC accomplished its evaluation of the precise info referring to Diageo and confirmed that Diageo was not a beneficiary of state help and that no evaluation can be issued,” the report learn.

Diageo declined to remark additional.

In fiscal 2021, the alcohol big noticed its gross sales get well considerably from the impression of the Covid-19 pandemic, posting a net sales increase of 16%.

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