February 2008

According to Tesco’s executive director, corporate and legal affairs, Lucy Neville-Rolfe, quoted in the Guardian: “While every company seeks to operate as tax-efficiently as possible, to do so is our duty to shareholders and customers alike – Tesco pays a great deal of tax…. For the year to February 2007 we paid over £1bn in the UK in corporation tax, business rates, employer’s national insurance contributions and other taxes. Combined with the approximately £750m of PAYE tax, employee’s NIC and net VAT that we collected in that financial year, this means we are in the top 10 taxpayers in the UK.”… I want to be 100% clear so there is no misunderstanding about what I mean – this statement is misleading hogwash designed to blind people to the reality of what Tesco pays and what it means…. The timing differences it refers to which account for the difference between tax paid and accrued amounts to £535 million in deferred tax liabilities – a figure that is growing compared to the previous year. Richard Murphy points out the inconsistencies between Tesco’s carefully worded PR statements, its CSR policy and the Companies Act 2006: Tescos is using abusive structures to increase profits at the expense of the UK taxpayer who form the vast majority of their customers to enhance the well being of the senior management first of all and the wealthiest in society who own their shares second (pensioners included by the way: almost all with private pensions are by definition in that wealthiest grouping) at cost to the rest of society at large…. There can be no justification in its actions, which almost mirror the kind of words I’ve seen time and again from the likes of PWC, KPMG and others. Given the scale of Tesco’s profit shifting and the fact this is part of an already publicly acknowledged larger scheme (see statements in their financial press release,) I am surprised that the company appears relaxed about its position.