Private equity backed supermarkets Asda and Morrisons did not pay a penny of corporation tax on their profits last year. New disclosures shed a light on how buyout firms minimise tax by loading their companies up with debt.
In the decade before they were bought out by their current private equity owners, they paid an average of more than £200 million of corporation tax a year between them. But since their buyouts, their profits have been reduced to losses, mostly due to hefty interest payments on the new debts loaded onto their balance sheets.
As corporation tax is only levied on profits, they pay nothing. Accounts filed by Asda at Companies House this month showed its finance costs, principally interest payments on debts, came to £395.5 million. That pushed Britain’s third largest supermarket to a £74 million pre-tax loss.
Meanwhile, Morrisons shelled out £406 million on financing costs, which contributed to a £1.3 billion pre-tax loss. And supermarkets came under fire when a report this month from the Competition and Markets Authority. It said that Asda and Morrisons had significantly increased their profit margin targets on fuel.
Asda was acquired in 2021 by the billionaire Issa brothers, who made a fortune in petrol forecourts, and London-based private equity firm TDR Capital for £6.8 billion. It is now saddled with £4.8 billion of net debt. Former Tesco boss Sir Terry Leahy spearheaded Clayton Dubilier & Rice (CD&R)’s £7 billion buyout of Morrisons, which left it with net debts of £6.6 billion.
Accounts filed by Asda at Companies House this month showed its finance costs, principally interest payments on debts, came to £395.5 million, pushing the supermarket to a £74 million pre-tax loss. Meanwhile, Morrisons shelled out £406 million on financing costs, which contributed to a £1.3 billion pre‑tax loss.
Thousands of tenants across England and Wales could be facing eviction because their landlords are falling behind in their mortgages. Over the past three months, almost 1,000 buy-to-let mortgage holders have been added to a watchlist. It monitors accounts which are in arrears by more than 2.5 per cent of the value of the remaining loan. There are 7,030 landlords in the situation, nearly double from years ago.
Shoppers are shunning soap and other personal hygiene products, with leading supermarkets reporting a drop in sales of the items amid the cost of living crisis. Demand for soap fell by 48 percent in the first six months of 2023 compared with the same period last year. Last year a report suggested 3.2 million adults were affected by “hygiene poverty”, with 12 percent saying they have avoided facing colleagues as a result. Sales of handwash were down by 23 percent.
Cameron not to be sniffed at
A Tory rising star who has rubbed shoulders with Rishi Sunak has been filmed offering “fun flour” to a guest on a signed, framed photograph of a grinning David Cameron. Philip Stephenson‑Oliver, chair of the powerful Westminster North Conservative Association, then watches as a pal appears to use a banknote to snort what is claimed to be cocaine in his bedroom at a house party on 14 July
A photograph of the framed Cameron picture also shows remnants of white powder, a rolled up note and a bank card clearly displaying Stephenson-Oliver’s full name. Somewhat embarrassing for the Tories, Stephenson Oliver likes to get his photo taken with prominent members in including Sunak, deputy prime minister Oliver Dowden and former health secretary Matt Hancock. The use he put the pictures to is unknown.
Blood scandal payout delays
A raft of Tory ministers will be hauled before the infected blood inquiry this week to give evidence on compensation for those affected by the scandal. Commons leader and former paymaster general Penny Mordaunt will appear on Monday with her successor Jeremy Quin facing questions on Tuesday before the Prime Minister on Wednesday.
Chancellor Jeremy Hunt, a former Health Secretary, will follow on Friday. Thousands of NHS patients were infected with HIV or hepatitis C by contaminated blood products. At least 2,400 people died. The 4,000 surviving victims began to receive interim payments of £100,000 in October. But the government has made no commitment about when all the compensation will be paid.
Charles cashes in on more dosh from us
King Charles got some nice tabloid headlines for saying he was taking a smaller percentage of the dosh from the profits of all the stuff he makes. What got missed from most articles is that he is none the less getting a bigger increase in cash from the scheme. He is to receive a huge pay rise from us, according to government plans to boost funding of the monarchy by 45 percent from 2025.
Details of the increase were contained in a review of royal funding published by the Treasury last Thursday. It revealed the royal family’s grant is due to increase from £86 million to £125 million. The monarchy’s annual budget, the sovereign grant, is pegged against the profits from a national property portfolio called the crown estate. The sovereign grant was £31 million when it was first introduced in 2012-2013. But it has a clause that says it can only ever go up not down.
Bill looms to make it easier for ‘robo-sacking’
Protections for gig economy workers will be watered down should the Tories succeed in pushing a bill through parliament. The new law would weaken a relatively little-known right. This forces app-based firms to explain themselves when they make automated decisions, known as “management by algorithm”.
These computer decisions are made before many workers realise their bosses use them. Campaigners have criticised it as a “deregulatory race to the bottom” that will further disadvantage gig economy workers during the cost of living crisis. Currently, people are able to see when companies such as Uber use the vast quantities of data at their disposal to automate decision-making.
That was reaffirmed by a court in April, which found in favour of several drivers who were “robo-fired” by the taxi firm, then denied an explanation. Yet few workers know about it. And a bill that has already cleared several Commons hurdles would make it impractical for many to actually pursue it in future.
The things they say
‘We have never seen that as a pejorative term, It’s awareness and being awake to things. What would be easy to do would be to sleepwalk and keep The Beano the way it had always been done for ever’
Mike Stirling, creative director of The Beano defends the comic as ‘woke’ for taking care over what stereotypes the characters produce
‘We are all confident all or the majority of any tax due will be paid’
Steve and Kate Dechan received £272 million in PPE contracts and owe £5.5 million in unpaid taxes
‘Show we can be trusted’
Labour Leader Keir Starmer hopes that more U-turns on policy will convince the voters
‘Something very wrong’
Keir Starmer says Labour will have to drop environmental baggage as he blames the London mayor’s tame traffic policy for losing a by-election
‘Constructive listening mode’
London Mayor Sadiq Khan makes clear he will do as he is toldOriginal post