THE US COMPANY that owns Cadbury’s has yet to pay corporation tax in the UK since its £11.5bn acquisition of the chocolatier in 2011.
Cadbury UK made £96.5m in profit in the year to 31 December, 2014, but has paid no corporation tax since 2010. According to the Financial Times, the Birmingham-based chocolate manufacturer paid an average of £6.4m a year in the decade prior to the takeover.
Mondelez International, formerly known as Kraft Foods, made use of a “tax-efficient structure put in place” to erase its UK corporation tax bill by using interest payments on an unsecured £8.2bn debt.
The debt is listed as a ‘quoted eurobond’ bond on a stock exchange in the Channel Islands. The interest payment then creates tax losses to offset against profits elsewhere in the group.
When UK companies pay interest to non-UK businesses, they normally have to withhold 20% of the payments and pass them to HM Revenue & Customs.
However, where loans are issued as quoted eurobonds on a recognised stock exchange, such as that in the Channel Islands, they are exempt.
Mondelez’s acquisition of Cadbury’s in 2011 proved controversial, and was exacerbated by its decision to cut 200 jobs from its UK workforce once the takeover went through, despite protests from workers at its Bournville factory in Birmingham.
Mondelez International said in a statement: “In common with all global businesses, we pay corporation tax based on the laws of the countries in which we operate. We comply with all applicable tax legislation in the UK, working closely with the relevant authorities, and on a global basis we pay hundreds of millions of dollars in corporate income tax annually.
“Since 2010 we are very proud to have invested over £200m into the UK across our world-leading innovation, science and manufacturing sites and our 4,500 UK employees.”
Ahead of Donald Trump’s inauguration, Nicholas Hallam explores the president-elect’s approach to VAT and tax policy
Messenger start-up Snap, owner of Snapchat, has said it will set up its non-US headquarters in London
An aggressive pro-business president-elect looms - but in 'protecting' the US will he damage others? Economics expert David Kern give his latest views on the global economy
Public Accounts Committee believes country-by-country reporting will help HMRC check if multinationals are paying the right tax - but laments that the information will remain between those parties