£600m Angel Trains tax hurdle may derail bids

Bidders for a rolling stock leasing company may be liable for a £600m tax charge if they fall foul of a key anti-avoidance scheme.

Angel Trains, owned by the Royal Bank of Scotland has been put up for sale, but may be scuppered by Schedule 10 of the Finance Act 2006, which guards against companies buying leasing businesses as a tax avoidance measure.

After being allowed capital allowances for tax purposes against their investment in new trains when rolling stock companies were privatised, RBS may be lumbered with a £600m tax toll on selling Angel.

The burden would be passed on to the winning bidder. The company may then seek to offset the tax losses against profits in other parts of their business, but this could fall foul of Schedule 10.

Angel makes profits of about £100m a year, and the difference between the written-down tax values of the assets and how much they fetch in the sale could leave RBS with the £600m tax bill, the Sunday Telegraph reported.

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