The Guardian and Tesco

Apparently this is front page in the print version but a little buried in the online one.

Tesco – an apology

Tesco has accepted a formal offer of apology by the Guardian in relation to the reports "Tesco\’s £1bn tax avoiding plan – move to the Cayman Islands" and "Every little bit helps: tax free pot of gold at end of Tesco\’s rainbow" (pages 1 and 27, February 27) and a related editorial and podcast. In these articles we reported that Tesco had created an elaborate off-shore corporate structure to avoid paying up to £1bn in UK corporation tax on profits from the sale of its UK properties, and that it had already successfully avoided corporation tax on the £500m profit it made from its first two property sales. We also suggested that this corporation tax avoidance was hypocritical, having regard to Tesco\’s public stance on social responsibility, and that Tesco\’s response to the charge had been evasive.

We now accept that these damaging allegations were unfounded and should not have been published. All profits generated by this sale and leaseback arrangement were earned by UK tax-resident companies and have been or will be included in Tesco\’s UK tax returns. The use of Cayman Island companies in the scheme was for legitimate stamp duty savings purposes. We also accept that Tesco\’s responses to the charges were truthful.

We regret that we did not publish the letter from Tesco\’s tax adviser received on the day of publication of the original articles and accept that the correction published on May 3 was insufficient. We accept that Tesco was not hypocritical in its corporation tax planning of these transactions having regard to its public stance on social responsibility and has a legitimate interest in seeing the facts about its tax arrangements fairly and accurately reported. Furthermore, we accept that Tesco is a very significant taxpayer, having contributed over £1bn to the public purse for the year to February 2007. We are happy to put the record straight and apologise to Tesco. We have also agreed to pay a sum by way of damages to a charity of Tesco\’s choice and a payment by way of costs.

They\’ve really rather got to accept the stamp duty legitimacy…..after all, the Guardian Media Group has used the same setup itself.

It is of course a pity that the paper didn\’t use reporters who were financially literate in the first place….but then, the paper doesn\’t seem to have an oversupply of those anyway.

Richard Murphy responds!

Of course the Guardian has lost, technically. But the substance of what it said was right, it just got the form wrong.

Just feel the truthiness there!

11 thoughts on “The Guardian and Tesco”

  1. “But the substance of what it said was right”

    Zinggg…. back to court, another grovelling apology to be printed.

  2. in his blog, Murphy comes across as a neo-nazi ranter – quite extraordinary.

    UKLIBERTY – does anyone give a fuck about what companies and people do to avoid paying taxes to corrupt political regimes? The real crime is when 3rd world dictators like Mugabe and Somoza etc suck in foreign Aid and export it to Switzerland

  3. Privat Eye’s tedious obsession with Tesco’s tax arrangements puzzles me. PE almost seems to believe that the money isn’t Tesco’s, nor does it seem to realise that the billions Tesco throws into the Treasury’s money incinerator doesn’t come out of the pockets of its employees and customers.

    If only I knew Tesco ways to keep some of the obscene levels of income tax and NI that those fartwit employees we call the state steal from me.

  4. “PE almost seems to believe that the money isn’t Tesco’s”

    Joint stock limited liability companies are a convenient legal fiction, created by the government in various 19th and 20th century laws.

    So no, the money isn’t Tesco’s; a joint stock company is permitted to exist by the government’s pleasure, and therefore has no more right to object (other than by dissolving or offshoring itself) when the government raises taxes than you do when Tesco raises the price of a pint of milk.

  5. So JohnB – every penny a company makes in profit really belongs to the state? Really?

    PE’s coverage of Tesco’s tax affairs isn’t about Tesco trying to avoid increases in tax, but rather the company’s use of legal means to minimise its tax liabilities – quite a different thing. PE is shocked – simply shocked – that Tesco tries not to throw all its profits into the state’s maw.

    I only wish we could all starve Leviathan this way.

    Incidentally, if tesco raises the price of milk I can shop around for a better deal; when the govt increases taxes we have no such option.

  6. every penny a company makes in profit really belongs to the state? Really?

    Effectively yes. Limited companies (originally railway companies, then banks, gradually extended to all companies) were granted relief from normal rules on liability because it was considered to be the only viable way of raising the money for necessary infrastructure. In exchange for this dispensation from normal laws granted to the shareholders, the company is subject to additional regulation and taxation beyond that faced by a sole trader or partnership.

    PE’s coverage of Tesco’s tax affairs isn’t about Tesco trying to avoid increases in tax, but rather the company’s use of legal means to minimise its tax liabilities

    Avoid = legal; evade = illegal. Neither I nor PE suggests that Tesco is trying to do anything illegal; you, I and PE appear to agree that Tesco is trying to avoid tax.

    Incidentally, if tesco raises the price of milk I can shop around for a better deal; when the govt increases taxes we have no such option.

    I certainly do, and unless you’ve a criminal record the length of your arm or no discernible skills, languages or employment experience, I imagine you do too (actually, you don’t even need those: Ireland’s got lower taxes than the UK, no immigration controls for UK passport holders, and has a demand for unskilled English-speaking labour…)

Leave a Reply

Your email address will not be published. Required fields are marked *