TaxCorporate TaxLaing pension hit could cost companies millions

Laing pension hit could cost companies millions

Tax advisers are engaged in a last ditch attempt to convince the taxman to change its mind over a pension contributions row that could cost companies hundreds of 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.

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