Tesco sues The Guardian over avoidance claims

Supermarket giant Tesco is suing The Guardian over claims the paper made about its tax planning.

Tesco says the paper wrongly alleged that Tesco had set up a tax avoidance structure offshore to avoid paying up to £1bn in corporation tax, and that the supermarket had already avoided £500m in corporation tax using the structure.

It is seeking damages for what it claims was a 'libel and malicious falsehood'.

It claims it has saved only £23m in stamp duty from the scheme, and could avoid a further £30m-£40m from the structure, again in stamp duty.

'It is not uncommon to use offshore companies for the purpose of joint ventures with third parties. In fact, the Guardian Media Group has itself announced an offshore structure as reported in the Guardian on March 4 2008,' Tesco said.

Lucy Neville-Rolfe, Tesco's executive director of corporate and legal affairs, said: 'It is very regrettable that we have had to take this step. We had hoped that the Guardian would be able to accept that it had made a mistake and apologise for what it had written, but despite our requests to them to set the record straight this has not happened.'

The paper said the claims were an attempt to 'chill public debate' on tax avoidance issues.

'This looks like a deliberate tactic by Britain's largest retailer to shut down perfectly legitimate inquiries into their methods of tax avoidance. At the same time that two Tesco directors are reported to have lobbied the government in private on matters of taxation, the company is now seeking to chill public debate on the same issues," it said in a statement.

'The articles were in the context of a series of articles on taxation issues in a globalised world. They clearly raised serious matters of public interest in relation to tax avoidance and tax management. We have never claimed Tesco behaved illegally. These are matters of considerable political importance at present, debated by all parties.

'Guardian journalists put a series of questions to Tesco over a period of nearly four months. At no point during the pre-publication correspondence would Tesco even admit the offshore structures, still less give the explanation they advanced post-publication. We offered meetings to discuss the allegations; this offer was rejected. We included Tesco's explanation in the articles and have subsequently offered the company the opportunity of a full and prominent right of reply.

'Instead of frankly explaining their position and/or engaging in a public dialogue Tesco has taken the extraordinary step of suing for libel in a clear attempt to close down the debate and discourage others from looking too closely.

'It's hard to think of another large public company which would resort to such bullying tactics.'

Further Reading:

Read The Guardian's version of the story

A tale of two [tax] stories