MG Rover faces tax questions
Company accounts show unusual tax liabilities
MG Rover faces questions over its tax affairs, it has emerged.
The company’s accounts reveal two significant and unusual tax issues that
have arisen. Administrators PricewaterhouseCoopers are apparently challenging
the company’s group relief arrangements, the rules whereby subsidiaries’ losses
can be offset against group profits.
The Phoenix Four also face a £1.7m IHT bill in relation to their pension fund
arrangements, structured through an Employee Benefit Trust (EBT), the vehicles
currently under attack by HM Revenue & Customs.
IHT bills are applied in various instances to close companies as a way of
preventing wealth being passed down generations through family businesses.
The company’s financial statements disclose the possible bill from HMRC, as
well as the fact that Deloitte, the group’s auditors, have qualified the
accounts.
The accounts also contain a writedown for the use of tax losses arising from
the EBT payments, following last summer’s Dextra decision, which established
that such payments were not deductible against profits.