E&Y profits from Tesco's Guardian win

The Guardian’s £800,000 bill for legal costs incurred during its dispute with Tesco included £87,000 paid to Ernst & Young, Accountancy Age has learned.

The newspaper was forced to apologise last September after accusing the supermarket of creating an elaborate off-shore structure to avoid paying up to £1bn in corporation tax on profits from the sale of its UK properties.

Headlines included ‘Tesco’s £1bn tax avoiding plan ­ move to the Cayman Islands’ and ‘Every little bit helps: tax free pot of gold at end of Tesco’s rainbow’.

The Guardian subsequently accepted the ‘damaging allegations were unfounded’.

Editor Alan Rusbridger said this week: ‘It was Tesco’s contention that The Guardian had made an elementary and obvious mistake. So simple was it that the bill includes more than £350k for their tax lawyers and accountants to explain to their own lawyers just what Tesco were up to.’

Tesco media director Jonathan Church said: ‘The Guardian got their story on Tesco and tax completely wrong. They have agreed to pay costs and we are now discussing the amounts with them through the courts.’ Ernst & Young declined to comment.