Companies running care services are among many avoiding millions in tax through a legal loophole. In the first of a series, Emily Dugan and Richard Whittell report
Companies receiving lucrative government contracts to run care services looking after tens of thousands of vulnerable people are avoiding millions of pounds in tax through a legal loophole.
The firms are cutting their taxable UK profits by taking high-interest loans from their owners through the Channel Islands Stock Exchange, an investigation by Corporate Watch and The Independent has found. By racking up large interest payments to their parent companies, they are able to reduce their bottom line and cut their tax bills.
The news will increase concern about NHS reforms that are seeing private companies take more responsibility for services. It also raises questions about the Government’s commitment to tackling corporate tax avoidance, which David Cameron has said “corrodes public trust”.
Over the course of this week, The Independent will reveal how more than 30 UK companies, including some of the UK’s most recognisable brands, are benefiting from this legal tax loophole, known as the quoted Eurobond exemption. HMRC considered restricting the use of the loophole in 2012 but never took action.
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