Saga/AA ‘pay no corporation tax’

Saga and the AA have paid almost no corporation tax whilst being owned by
private equity.

Research by the
suggests that the two offset their profits through the interest payable
on their debts.

In 2006, the AA made a profit of £252m, wiped out by £222.3m ‘finance costs’.
Saga told the BBC it had made EBITDA of almost £160, eliminated by interest
charges on £1.6bn of debt.

The findings will probably be looked at by the Treasury Select Committee,
currently investigating private equity and its tax arrangements. The alleged
abuse of the tax system has cause a political row.

Labour MP and head of the committee John McFall said: ‘The question is, are
the private equity companies using debt as equity?’

‘If they are, then they are distorting the system. These are questions that
are still to be answered.’

Further Reading

Tax Hack on the Saga/AA private equity tax issue

Read the BBC

Robert Peston, BBC Business Editor’s blog on the issue

Related reading