BAE wins deal through VAT break

BAE Systems is to be given control over building two new aircraft carriers
for the Royal Navy in an attempt to avoid a £700 million tax bill.

The Ministry of Defence is handing over control of the project to BAE Systems
to take advantage of a tax law where VAT is waived if ships are built by one
company as opposed to multiple enterprises, reports The Times.

The £3.8 billion carriers will be built by an alliance of companies including
BAE, VT, Babcock and Thales UK, but only one must be named prime contractor.

The Government had hoped not to give BAE, Europe’s largest defence company,
prime status on the project because it fears a return to the days of cost
overruns and delays in big defence projects.

Further reading:

The Times story

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