Laing pension hit could cost companies millions

In a mix-up that has already led to PFI group John Laing booking a £57m tax hit, companies are facing confusion over whether they get tax relief for pension contributions made to subsidiaries they have sold.

Other companies are thought to be likely to face similar hits as advisers try to persuade HM Revenue & Customs that it has made a mistake. ‘It’s a bizarre situation. There are a number of businesses out there that have changed direction and sold off subsidiaries, only find to find that their retained pension contributions to these subsidiaries may no longer be eligible for tax relief,’ said Bill Dodwell, corporate tax partner at Deloitte.

The difficulty has come about as a result of the government’s attempts to simplify pension tax rules.A John Laing spokesman said the company was in contact with HMRC on the matter and would strenuously argue its case. ‘We are adamant that the pension contributions we have made and will make in the future should be eligible for tax relief,’ he said.

HMRC said it was working on further guidance, but could not comment on specific cases.